EDITORIALS & OPINIONS OF THE WEEK:
(Mini Reads followed by full commentary of the news below)

FROM MALAYA

MACASAET: GRAND PLANS, SMALL GAINS


JULY 21 ---By Amado P. Macasaet One of many setbacks to developing the Philippine economy is “catching up with the Joneses.” By this I mean the government comes up with programs other countries have successfully implemented. Our policy makers believe we can do as much if not better. The results as we can see are dismal failures. One of the glaring examples is the “progressive car manufacturing program” the Marcos administration crafted as early as 1968. Foreigners came to participate. They left before nobody suspected they would. Today, more than 60 percent of the automobiles are imported, mostly from Japan and Thailand. A few units come from the United States imported by Ford Philippines which tried to make engines. I thought Mitsubishi tried to make axles not only for its own use but for its competitors in the Philippines and other countries. The project is not exactly a phenomenal failure. The fact is Mitsubishi failed to proceed with axles. Imports are encouraged by comparison of the economics with local assembly. The so-called road map that is supposed to boost manufacturing and hopefully but painfully end up in the Philippines having its own car has not discouraged imports. The downside is the slow or non-transfer of technology of making cars and low employment absorption. The upside is the benefit the consumers get in the form of affordable prices. READ MORE...

ALSO: HOW CHINA VIEWS THE PHILIPPINE CASE AT THE HAGUE


JULY 21 --By NESTOR MATA NOW that the Permanent Court of Arbitration in The Hague has finished hearing the Philippines’ case against China’s claims to virtually all of the South China Sea, what would be Beijing’s response, if the tribunal rules in favor of Manila? The clearest outline of China’s stance on the case, according to Dr. Xue Li, director of the Department of International at the Institute of World Economics and Politics, Chinese Academy of Social Sciences, may found in the position paper released by China’s Foreign Ministry late last year on the matter of jurisdiction in the South China Sea dispute with the Philippines. As everyone who has been following the South China Sea issue knows, the Philippines submitted a “memorial” of ten volumes and nearly 4,000 pages to the International Tribunal on the Law of the Sea. Within that memorial, the first volume was the most important – 270 pages including the Philippines’ legal analysis and relevant evidence relating to this case, explaining in detail why the arbitral tribunal has the jurisdiction to accept the Philippines’ request for arbitration. Volumes two through ten were appendixes, including archival data, evidence, and maps supporting the Philippines’ position. According to the tribunal’s process, China had to present its counter-memorial by December 15, 2014, but it refused to participate in the arbitration. Instead, Beijing released its position paper on the eve of the December deadline in which it expounded on why the tribunal does not have jurisdiction over this case and reiterated China’s position of not participating in the case. Dr. Xue Li, in his analytical article for The Diplomat magazine on current Asia-Pacific affairs, recalled that in August 2014, Chinese Foreign Minister Wang Yi put forth the “dual track approach,” sending the message that China agreed to handle the South China Sea disputes under a multilateral framework. ASEAN as a whole could play a suitable role in the disputes, but China opposed interference from countries outside the region, especially mediation that favors one side over the other. From this we can see that, in light of the internationalization of the South China Sea disputes, Dr. Xue Li went on, China was no longer opposing any type of internationalization, but instead favoring limited (or relatively controllable) regionalization of the issue in order to prevent unlimited (and uncontrollable) globalization. READ MORE...

PHILIPPINE MILITARY MODERNIZATION AND THE ‘CHINA THREAT’
[Quote of the Day: “There have been very few leaders in the Philippines who have thought strategically... With its single six-year terms, our leaders simply cannot think beyond that time frame.” – Carolina G. Hernandez, political scientist at the University of the Philippines.]


JULY 23 ---By NESTOR MATA WHILE the Philippines is awaiting The Hague tribunal’s decision on its case against China’s claims to virtually all the South China Sea, news reports noted that Manila has been “ramping up” its military spending at the same time amid a rising threat from China in the West Philippine Sea. While the reports provide important updates about the status of Philippine military modernization, it is important to put them in broader perspective because it can otherwise mislead some, in the view of Asian affairs observers and geopolitical analysts. First of all, as analyst Prashanth Parameswarn of The Diplomat magazine on current Asian-Pacific affairs wrote, citing a news report of Reuters, the total spending amount recently announced is not a new increase, but an approval of 998 billion pesos for funding of plans as articulated in the Armed Forces Modernization Act initiated in 2013. That plan, put simply, divided military modernization into three “horizons” or phases – the first from now till 2017; the second from 2018 to 2023; and the third from 2024 to 2028. Beyond the amount, the projects under the first horizon have already been selected for the Air Force, Navy, Army and general headquarters, and they include fighter jets, frigates, helicopters, radars and base upgrades. Indeed, due to the delay in securing approval from the government, some of these projects have already gotten underway. So, to be clear, what is new is the amount that has finally been officially approved, rather than the plan itself or what is already being bought under it. Second, it is wrong to think about military modernization as solely being directed at China. The Philippines faces a range of internal and external challenges – including insurgencies, natural disasters, unresolved territorial and sovereignty issues with neighboring states, and a significant lag when it comes to keeping up with the Joneses in Asia more generally. While Chinese aggression in the South China Sea often grabs the headlines, as noted by analyst Parameswaran, it is only part of what military planners have to think about. That means Philippine capabilities are directed not only at one threat, but several at one time. READ MORE...

ALSO: TRYING TO UNDERSTAND A BANK ECONOMIST


JULY 23 ---By Amado P. Macasaet
Emilio Neri Jr., lead economist of the Bank of the Philippine Islands, was quoted by this newspaper saying he believes it is necessary for the Monetary Board to cut the reserve requirements against deposit liabilities from the present 20 percent to 18 percent. He pointed out reduction is necessary “to bolster the GDP,” inflation, bank credit, money supply and national government spending growth which are all slowing down. I do not understand Mr. Neri’s purpose of cutting the reserves. The reserve requirement of 20 percent at present means for every peso of deposit in the banks, 20 centavos is frozen in the vaults of the Bangko Sentral. If the reserve is reduced two percentage points to 18 percent, hundreds of billions of pesos will be released to the money stream. It is economists like Neri who correctly believe the reality that when there is too much money chasing after fewer goods, the inevitable consequence is higher prices or inflation. By his own words “to bolster inflation” Mr. Neri does not seem to welcome a low inflation rate. The rise in the inflation rate could be minimized, in fact avoided if there is a balance between demand and production. There is none. Mr. Neri also said the reserve requirement has to be reduced to bolster credit. The reality in the market place is that many banks are not exactly interested to lend big to commercial-industrial borrowers for one simple reason. Interest income or charges to the borrowers is below 10 percent, too low for the attendant risks. READ MORE...

ALSO EDITORIAL: STILL WAITING FOR CLOSURE


JULY 23 ---STANDARD EDITORIAL CARTOON  THE Ombudsman says President Aquino is not to blame in any way for the Mamasapano debacle. His caveat about prior coordination by the PNP Special Action Force with the military to provide a supporting role in the execution of Oplan Exodus, it would appear, was enough to convince investigators that the blame for the 67 deaths including 44 gallant police officers should be pinned on somebody else. While the harsher bar of public opinion might disagree with the Ombudsman’s pronouncements, the matter of presidential liability, as of yesterday, has been laid to rest. The same could not be said of the festering wounds of the January 25 tragedy. Nearly six months after, questions continue to linger and would remain so beyond the conclusion of the investigation by the Department of Justice into the brutality perpetrated on the wounded policemen and the inquiry by the Ombudsman into the political dynamics of putting those men in harm’s way. Time may have tempered the fires of public outrage but until those who were responsible for the deaths of so many of our countrymen are held accountable, the Mamasapano bloodbath will remain a painful spot in our collective consciousness. Indeed, many of our questions about that fateful day and the subsequent events may never be answered. But for the sake of those who fell in the performance of their duties and the survivors who still bear the scars visible and hidden, we hope our nations leaders, the military, and the PNP would pay heed to the lessons of their supreme sacrifice. We dare not forget. – PT. THIS IS THE FULL EDITORIAL

ALSO: PARTLY RIGHT AND WHOLLY WRONG


JULY 20 ---INQUIRER EDITORIAL CARTOON The only good thing that may be said of the line of skirmish chosen by our likely presidential contenders come 2016 is that they have already homed in, quite accurately, on their potential opponents’ vulnerable points. How they have chosen to respond to the opening salvos however, leave much to be desired. The two leading names on surveys are swapping catty remarks, at every prod from the reporters, on the primacy of experience and political savvy over honesty and good intentions. Both of course are correct in so far as marking the tideline of their own political strengths. And yet both sides disappoint in failing to answer with convincing counter-argument the issues confronting them. READ MORE...


READ FULL MEDIA EDITORIALS & OPINIONS HERE:

GRAND PLANS, SMALL GAINS
[(One example) The Philippines is now said to be the fifth largest producer of nickel in the world. Nothing much is owed the government for this feat. It was the private sector in joint venture with Sumitomo of Japan that helped mine and export the high grade ore to China. After accumulating enough funds, the joint ventures partners set up a refinery followed by another in Surigao.]


By Amado P. Macasaet

MANILA, JULY 27, 2015 (MALAYA) By Amado P. Macasaet - One of many setbacks to developing the Philippine economy is “catching up with the Joneses.” By this I mean the government comes up with programs other countries have successfully implemented. Our policy makers believe we can do as much if not better.

The results as we can see are dismal failures. One of the glaring examples is the “progressive car manufacturing program” the Marcos administration crafted as early as 1968. Foreigners came to participate.

They left before nobody suspected they would.

Today, more than 60 percent of the automobiles are imported, mostly from Japan and Thailand. A few units come from the United States imported by Ford Philippines which tried to make engines.

I thought Mitsubishi tried to make axles not only for its own use but for its competitors in the Philippines and other countries. The project is not exactly a phenomenal failure. The fact is Mitsubishi failed to proceed with axles.

Imports are encouraged by comparison of the economics with local assembly. The so-called road map that is supposed to boost manufacturing and hopefully but painfully end up in the Philippines having its own car has not discouraged imports.

The downside is the slow or non-transfer of technology of making cars and low employment absorption. The upside is the benefit the consumers get in the form of affordable prices.

READ MORE...

Since the country produces enough copper concentrates, the state crafted a copper smelting program called PASAR (Philippine Associated Smelter and Refining Corp.) The project is practically a failure because it could not lay its hands on enough raw materials. The copper mines find the export market buying at higher prices.

The Philippines is now said to be the fifth largest producer of nickel in the world. Nothing much is owed the government for this feat. It was the private sector in joint venture with Sumitomo of Japan that helped mine and export the high grade ore to China. After accumulating enough funds, the joint ventures partners set up a refinery followed by another in Surigao.

Nickel Asia continues to export high-grade ore. The poorer kind is refined in the two smelters. In less than two years after shares of the company were listed in the Philippine Stock Exchange, Nickel Asia declared two stock dividends that multiplied the number of shares of the Investors by 1.5 times. There was a hefty cash payout before the number of shares were multiplied and given free to the stockholders.

Decades ago, I was one of the guests of the late Don Jesus Cabarrus who was invited to witness the pilot nickel refinery plant in Saskatchewan, Canada. The pilot plant worked well using the Sheritt-Gordon (or was it the Le Nickel?) process.

Then came the Yom Kippur war that raised the prices of fuel beyond anybody’s imagination. Marinduque Mining and Industrial Corp. was sunk deep in fuel debts with Caltex. But that was not the problem that killed the goose they thought would lay the golden egg.

As the operation went on, it turned out the ore to be refined into nickel metal had very high iron content. Feasibility became doubtful. By the time the refinery was shut down unable to pay huge fuel debts and unable to produce the nickel metal, a mountain of ore with high iron content became the eye sore of the closed refinery. The ore is still there. Nobody can figure out what to do with it.

In the days of Diosdado Macapagal, the government came up with the wood processing program to add more value to the wood and slow down felling of logs. The forest continued to be raped of its cover.

Nothing came of the program.

In the time of Heherson Alvarez as secretary of environment and natural resources, the government crafted the “integrated forest management agreement” which by the literal meaning of the plan requires distribution of forest concessions to those who have the capability to process the wood.

The program was dead in the waters. Makers of wood furniture now import hard wood from as far as Brazil after the government imposed a total log ban. The trees have all but been felled.

The solution was to encourage tree planting everywhere where trees grow. When our home was rising in the middle of a small farm in Lipa City, I planted narra trees believing by the time my grandchildren are ready to build homes, narra would be too expensive and hard to find. After 23 years, the trees have grown to commercial size, ready to be felled if we need them to build homes.

The government stifled people’s initiative to plant trees at their own expense. There is a law that requires us to get a permit from the DENR and pay a fee to cut the trees. The forests became bald because of illegal or over-cutting of trees. Lumber yards have practically disappeared. No more trees. Not one illegal logger has been apprehended for the heinous crime.

We have the insatiable penchant for going big but become even smaller. This is a lesson we have not learned. We start at the top only to fall headlong. This is what I mean when I keep saying we do not seem to have found our bearing.


HOW CHINA VIEWS THE PHILIPPINE CASE AT THE HAGUE By NESTOR MATA on July 21, 2015


By NESTOR MATA

NOW that the Permanent Court of Arbitration in The Hague has finished hearing the Philippines’ case against China’s claims to virtually all of the South China Sea, what would be Beijing’s response, if the tribunal rules in favor of Manila?

The clearest outline of China’s stance on the case, according to Dr. Xue Li, director of the Department of International at the Institute of World Economics and Politics, Chinese Academy of Social Sciences, may found in the position paper released by China’s Foreign Ministry late last year on the matter of jurisdiction in the South China Sea dispute with the Philippines.

As everyone who has been following the South China Sea issue knows, the Philippines submitted a “memorial” of ten volumes and nearly 4,000 pages to the International Tribunal on the Law of the Sea.

Within that memorial, the first volume was the most important – 270 pages including the Philippines’ legal analysis and relevant evidence relating to this case, explaining in detail why the arbitral tribunal has the jurisdiction to accept the Philippines’ request for arbitration. Volumes two through ten were appendixes, including archival data, evidence, and maps supporting the Philippines’ position.

According to the tribunal’s process, China had to present its counter-memorial by December 15, 2014, but it refused to participate in the arbitration. Instead, Beijing released its position paper on the eve of the December deadline in which it expounded on why the tribunal does not have jurisdiction over this case and reiterated China’s position of not participating in the case.

Dr. Xue Li, in his analytical article for The Diplomat magazine on current Asia-Pacific affairs, recalled that in August 2014, Chinese Foreign Minister Wang Yi put forth the “dual track approach,” sending the message that China agreed to handle the South China Sea disputes under a multilateral framework.

ASEAN as a whole could play a suitable role in the disputes, but China opposed interference from countries outside the region, especially mediation that favors one side over the other.

From this we can see that, in light of the internationalization of the South China Sea disputes, Dr. Xue Li went on, China was no longer opposing any type of internationalization, but instead favoring limited (or relatively controllable) regionalization of the issue in order to prevent unlimited (and uncontrollable) globalization.

READ MORE...

This stance was also related to China’s “One Belt, One Road” — the goal is to defuse the South China Sea disputes, which are a major weak point in China-ASEAN relations, or at least to prevent the disputes from attacking a new wave of cooperation between China and ASEAN.

The paper sought to make three points: the South China Sea disputes must be solved though political dialogue; China will not accept any ruling from international arbitration; and China’s action in this regard have a strong legal basis. The paper uses three sections to prove in detail that the Philippines’ move to arbitration is illegal and unreasonable, and that arbitration has already been ruled out.

Taking each of these points in turn, the arbitration is illegal because it violates the “Declaration of Conduct on the South China Sea.” Moreover, the essence of its arbitration case concerns the question of sovereignty over some islands and reefs in the South China Sea and thus the UN Convention on the Law of the Sea is not applicable and cannot resolve the case.

It is unreasonable because it violates a bilateral agreement between China and the Philippines not to unilaterally request arbitration when there are still other effective channels to explore.

The Philippines knew that China would not accept the ruling of an international arbitral tribunal, but still chose this unfriendly action. As for arbitration being ruled out, in 2006 China, in accordance with UNCLOS regulations, declared that it will not accept compulsory arbitration procedures either to delimit maritime boundaries or to resolve disputes.

The paper ends with a conclusion: the arbitral tribunal does not have jurisdiction over this matter, and that the correct way to resolve disputes is through consultation and negotiation. China will not change its established position or policies because of this arbitration.

However, the document falls short in two places, according to Dr. Xue Li. First, China believes that the arbitration case brought by the Philippines in essence touches on the question of sovereignty over features in the South China Sea, and thus that the tribunal does not have jurisdiction.

But the Philippines believes that its case only asks for arbitration on the matter of whether or not China’s assertion of maritime rights is in accordance with UNCLOS, a question where the tribunal does has jurisdiction. Facing such a disagreement, a third party might conclude that the case falls under the scope of the tribunal’s duties, unless China can bring overwhelming evidence to the contrary.

China’s stance on the core issue of the arbitration is a subjective judgment, so its legal effectiveness is limited. Also, according to the practice of China’s own domestic law, the right to decide jurisdiction belongs to the courts, and not to either party of a lawsuit.

Second, the paper did not clarify the “nine-dash line.” That the meaning of “nine-dash line” should be clarified is almost universally acknowledged by countries other than China, and doing so would almost certainly make a favorable impression on the tribunal.

Although China decided not to participate in the arbitration, it could still use this as an appropriate time to put forth an authoritative explanation of its “nine-dash line,” thereby assuaging the doubts of the outside world.

This is an excellent opportunity for China to implement its emphasis on “amity, sincerity, mutual benefit, and inclusiveness” and its “good neighbor” policy. By publicly releasing its position paper, Beijing hoped to accomplish at least two things: influencing the tribunal’s decision on the question of jurisdiction and influencing the Philippines’ subsequent actions.

But the judges on the arbitral tribunal consist of the highest legal experts of each country, and they highly value their judicial independence. Because of this, China’s position paper cannot strongly influence their judgments on the question of jurisdiction or on the case itself.

The Chinese government looks at the arbitration case as part of the overall China-Philippines relationship. China’s viewpoint is quite clear: trying to handle the South China Sea dispute by completely “internationalizing” it is not helpful for dispute resolution and can only harm the bilateral relationship.

To China, returning to peaceful negotiations under the China-ASEAN framework is the only path toward resolving the disputes in a “win-win” manner. Now that the Philippines has brought a case, it must end the suit. But this is unlikely to happen, at least not before President Aquino’s term is up in 2016.

The tribunal heard the Philippines’ oral arguments on the case, and its decision will be made by the end of 2015 at the soonest. If it decides it does not have jurisdiction or rules against the Philippines, then the case ends there. If the decision goes against China, that it does have jurisdiction, then Philippines will gain support. In such case, then China must prepare for the possible results of the arbitration:

First, the tribunal decides that China’s the “nine-dash line” is invalid. If that happens, the ASEAN claimants might abandon their remaining caution and rush to carry out large-scale oil drilling within the “nine-dash line,” possibly enlisting cooperation from many international oil companies and thus involving many countries.

Second, the tribunal could decide that the Philippines’ rights within its exclusive economic zone and continental shelf are in accordance with UNCLOS. In that case, how should China adjust its current measures?

China could refuse to accept the tribunal’s ruling and stubbornly continue according to its own enforcement practices; no one has the ability to stop China.

But if a conflict arises between China and ASEAN claimants (something that is difficult to avoid and could happen at any time), Western and ASEAN media outlets will accuse China of being a hegemon, of not respecting international law, and of driving ASEAN claimant states to rely on the United States for security guarantees.

This is obviously not beneficial for China and its vision of Asian security or for its Belt and Road initiative.

***

Quote of the Day: “Claims and incidents, if they are tied to the vital interests of those in power, can lead to war!”


PHILIPPINE MILITARY MODERNIZATION AND THE ‘CHINA THREAT’ By NESTOR MATA on July 23, 2015


By NESTOR MATA

WHILE the Philippines is awaiting The Hague tribunal’s decision on its case against China’s claims to virtually all the South China Sea, news reports noted that Manila has been “ramping up” its military spending at the same time amid a rising threat from China in the West Philippine Sea.

While the reports provide important updates about the status of Philippine military modernization, it is important to put them in broader perspective because it can otherwise mislead some, in the view of Asian affairs observers and geopolitical analysts. First of all, as analyst Prashanth Parameswarn of The Diplomat magazine on current Asian-Pacific affairs wrote, citing a news report of Reuters, the total spending amount recently announced is not a new increase, but an approval of 998 billion pesos for funding of plans as articulated in the Armed Forces Modernization Act initiated in 2013.

That plan, put simply, divided military modernization into three “horizons” or phases – the first from now till 2017; the second from 2018 to 2023; and the third from 2024 to 2028. Beyond the amount, the projects under the first horizon have already been selected for the Air Force, Navy, Army and general headquarters, and they include fighter jets, frigates, helicopters, radars and base upgrades.

Indeed, due to the delay in securing approval from the government, some of these projects have already gotten underway. So, to be clear, what is new is the amount that has finally been officially approved, rather than the plan itself or what is already being bought under it.

Second, it is wrong to think about military modernization as solely being directed at China. The Philippines faces a range of internal and external challenges – including insurgencies, natural disasters, unresolved territorial and sovereignty issues with neighboring states, and a significant lag when it comes to keeping up with the Joneses in Asia more generally.

While Chinese aggression in the South China Sea often grabs the headlines, as noted by analyst Parameswaran, it is only part of what military planners have to think about. That means Philippine capabilities are directed not only at one threat, but several at one time.

READ MORE...

The big picture point to take away from the purpose of military modernization is that it seeks to increase the Philippine military’s ability to counter not only internal threats, but a range of external threats in a more decisive manner. Like other nations, this includes – but is not limited to – China.

Third, even as the Philippines builds up its capabilities over the next few years, it will take a long time for it to catch up to some of neighbors, not to mention China. While Manila’s military modernization efforts under the Aquino administration have been vigorous relative to anemic periods in the past, the fact is that the Philippines is one of Asia’s weakest militaries and is building from a very low base.

The U.S.-Philippine alliance has no doubt been a big part of how Manila thinks about its defense, though those familiar with the history of the relationship know full well that the Philippines’ excessive reliance on – and, at times, shaky commitment to – Washington in the past has also been an issue that military officials are quite candid about the long road that lies ahead.

The short term goal that defense planners have been talking about is achieving minimum credible deterrence, and that the goal is not to defeat China, but to make any state think twice before attacking.

Fourth, one should maintain a healthy skepticism when it comes to linear projections of military modernization. The ‘three horizons’ conception of Philippine military modernization makes it seem like there is a fixed conception of how this will play out in the coming years.

In reality, while there is consensus around the general idea that the Philippines should strengthen its defense capabilities, the outgoing Aquino administration’s commitment to doing so may not be shared to the same degree – or may play out in a different way – under its successors following the 2016 elections. The extent to which future administrations are able to continue this goal is also dependent not only on their own preferences, but the circumstances that inform them.

All this should not detract from the importance of the Philippines’ ongoing military modernization, which is long overdue. It should also not lead one to consider this trend in isolation rather than in tandem with the other tools of Philippine statecraft and its defense relationships with other allies and partners. But it should temper the expectations of those getting much too excited about Manila’s defense buildup now lest they end up being disappointed further down the line.

***

Quote of the Day: “There have been very few leaders in the Philippines who have thought strategically... With its single six-year terms, our leaders simply cannot think beyond that time frame.” – Carolina G. Hernandez, political scientist at the University of the Philippines.


TRYING TO UNDERSTAND A BANK ECONOMIST By Amado P. Macasaet on July 23, 2015


By Amado P. Macasaet

Emilio Neri Jr., lead economist of the Bank of the Philippine Islands, was quoted by this newspaper saying he believes it is necessary for the Monetary Board to cut the reserve requirements against deposit liabilities from the present 20 percent to 18 percent.

He pointed out reduction is necessary “to bolster the GDP,” inflation, bank credit, money supply and national government spending growth which are all slowing down.

I do not understand Mr. Neri’s purpose of cutting the reserves. The reserve requirement of 20 percent at present means for every peso of deposit in the banks, 20 centavos is frozen in the vaults of the Bangko Sentral. If the reserve is reduced two percentage points to 18 percent, hundreds of billions of pesos will be released to the money stream.

It is economists like Neri who correctly believe the reality that when there is too much money chasing after fewer goods, the inevitable consequence is higher prices or inflation. By his own words “to bolster inflation” Mr. Neri does not seem to welcome a low inflation rate. The rise in the inflation rate could be minimized, in fact avoided if there is a balance between demand and production. There is none.

Mr. Neri also said the reserve requirement has to be reduced to bolster credit. The reality in the market place is that many banks are not exactly interested to lend big to commercial-industrial borrowers for one simple reason. Interest income or charges to the borrowers is below 10 percent, too low for the attendant risks.

READ MORE...

Economists say inflation tends to go up when too much money chases fewer goods. By his own words, I guess that is exactly what Mr. Neri does not want to see – inflation coming down to the recent all-time low of 1.2 percent from the previous month’s 1.6 percent.

In the mind of Mr. Neri, as we reported, the reserves have to be cut to bolster credit. I do not find this to be sitting squarely with the fact many banks are not interested in lending big amounts of money to commercial-industrial borrowers for pure business sense. Interest rate income on big loans is lower than 10 percent. Low interest charges might be a big factor that drive the banks to go heavy on consumer loans where borrowers are charged as high 20 percent. Nearly half of a respectable bank’s portfolio is assigned to consumer loans. Demand is high.

Nearly all of the banks are heavily involved in lending to small and medium scale businesses. They charge higher interest because lending to a big number of small people, mostly unsecured incurs higher risks and bigger administrative costs. So far the record looks good. Average default rate is placed at about 4 percent.

The banks are looking for small borrowers. In time past a borrower who goes to the bank in slippers looking unwashed are literally shown the door. This time the banks are trying to find them to lend them small amounts of money without collateral to help them start small business.

Mr. Neri might try to see for himself the truth or falsity of this claim by checking out with BanKO, the country’s first micro bank organized by the Bank of the Philippine Islands. I recall BanKO sent out 200 well-trained personnel seeking out small qualified borrowers. This to me is a clear indication credit is reasonably adequate.

The proposed cut of the reserves to raise the rate of growth of national spending does not find substance in the widespread accusation the Aquino administration cannot spend fast enough for infrastructure although Florencio Abad, secretary of budget and management, does not stop claiming the budgets of line agencies have been released but not completely spent. This to me means credit is adequate. There is enough money to go around. In fact, the government periodically reports budget surpluses precisely because collections and borrowings exceed expenditures. The government is not spending fast enough to push growth at a faster clip.

Mr. Neri claims the Monetary Board might tinker with the reserves in its meeting on Aug. 13. I have no information on that. What I keep hearing from BSP Governor Amado Tetangco is that the MB has not seriously considered raising key rates which will make money or loans more expensive and deter the growth of consumer demand.

The other result of inflation tending to rise after the key rates sits well with Mr. Neri’s obvious desire to push up the fundamental indictors including credit and inflation being too low and may be big factors that, in his mind, slow down the growth of the Gross Domestic Product.

The other fear of Mr. Neri is what he claims to be growing size of unhedged foreign exchange borrowing which automatically become parts of total national foreign debt. I thought this is pure business decisions of the bank not dissimilar to the BSP’s foreign exchange transactions or investments that recently helped boost the gross international reserves to higher than $80 billion.

Personally, I would be scared if for any reason, speculate on the dollar to preserve the value of their money. True the exchange rate is slowly deteriorating in practically all emerging markets.

I see this as the inevitable knee-jerk result of the debt crisis in Greece and the possible increase of key rates by the Federal Reserve Board of the United States.

The fundamental economic indicators in the Philippines – low inflation rate, unchanged growth forecast, slightly higher employment rate among many do not strike fear the economy could be in danger, therefore the reserve requirements must be cut to avoid a dire possibility I, for lack of education and background, simply cannot understand.

I write this place in the hope Mr. Neri will find time to explain to me in person or in an email the meat of his ideas. If it turns out our reporter misquoted him massively I apologize to Mr. Neri. We will publish his reaction if he so desires.


EDITORIAL: STILL WAITING FOR CLOSURE July 23, 2015


STANDARD EDITORIAL CARTOON

THE Ombudsman says President Aquino is not to blame in any way for the Mamasapano debacle.

His caveat about prior coordination by the PNP Special Action Force with the military to provide a supporting role in the execution of Oplan Exodus, it would appear, was enough to convince investigators that the blame for the 67 deaths including 44 gallant police officers should be pinned on somebody else.

While the harsher bar of public opinion might disagree with the Ombudsman’s pronouncements, the matter of presidential liability, as of yesterday, has been laid to rest.

The same could not be said of the festering wounds of the January 25 tragedy.

Nearly six months after, questions continue to linger and would remain so beyond the conclusion of the investigation by the Department of Justice into the brutality perpetrated on the wounded policemen and the inquiry by the Ombudsman into the political dynamics of putting those men in harm’s way.

Time may have tempered the fires of public outrage but until those who were responsible for the deaths of so many of our countrymen are held accountable, the Mamasapano bloodbath will remain a painful spot in our collective consciousness.

Indeed, many of our questions about that fateful day and the subsequent events may never be answered.

But for the sake of those who fell in the performance of their duties and the survivors who still bear the scars visible and hidden, we hope our nations leaders, the military, and the PNP would pay heed to the lessons of their supreme sacrifice.

We dare not forget. – PT.


PARTLY RIGHT AND WHOLLY WRONG July 20, 2015


INQUIRER EDITORIAL CARTOON

The only good thing that may be said of the line of skirmish chosen by our likely presidential contenders come 2016 is that they have already homed in, quite accurately, on their potential opponents’ vulnerable points.

How they have chosen to respond to the opening salvos however, leave much to be desired.

The two leading names on surveys are swapping catty remarks, at every prod from the reporters, on the primacy of experience and political savvy over honesty and good intentions.

Both of course are correct in so far as marking the tideline of their own political strengths. And yet both sides disappoint in failing to answer with convincing counter-argument the issues confronting them.

READ MORE...

Vice President Binay has yet to address the allegations of irregularities in the Makati City government deals in the three administrations under his family. He has promised to fight corruption in government but is attacking the institution of the Office of the Ombudsman.

Senator Grace Poe has been largely content in highlighting the comparison of her reputation for integrity with those of her potential opponents with few words by way of explaining how it will make up for her lack of experience in governance.

Whoever she is listening to nowadays should have started explaining that any administration will have to be able to navigate Congress to get its legislative agenda passed, more so if it has minority control of either chamber.

The senator has time and again mentioned her respect for the political hindsight of President Aquino who himself has previously admitted that an efficient presidency is one without the need for a learning curve.

Perhaps the contenders have been lulled into thinking the campaign period is still a long way off and there is still plenty of time to hone their stump speeches before show time.

We hope to be proven wrong. – PT.


Chief News Editor: Sol Jose Vanzi

© Copyright, 2014 by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE