Manuel Buencamino’s article in today’s Business Mirror contains the short answer to Gloria Arroyo’s false advertising.
Dispatches from the Enchanted Kingdom
ny Manuel Buencamino
Looks aren’t everything
I was almost seduced by the campaign salvo you fired off a week ago. You followed Billy Esposo’s cardinal rule on marketing. You glorified your product, Brand 666, trashed the other brand and sucked up to the consumer.
Your fine work is now included in my “wall of quotes,” right beside another quotation which I will tell you about later. Anyway, I’m reprinting your statement, just in case you’re not sure exactly which of the many things you’ve said impressed me.
Statement of Ignacio R. Bunye: “President Arroyo is focused on the economy and the business of the people, and will not allow politics to weigh down on her agenda.
“This government will continue to stand on a platform of performance and the politics of development and social justice, even if our detractors try their worst to draw and bait us into the arena of mudslinging.
“The Filipino people are intelligent and totally turned off by partisan grandstanding and they will not allow the forthcoming polls to knock the Philippines off the right track, which is to work with the national leadership in keeping confidence up, gaining investments, creating jobs and increasing the social payback of economic reforms.” End.
You are on the right track. . . with your sales pitch, that is. There’s an election coming and it’s going to be tough debunking economic “achievements” that fit into a bumper sticker—”the peso is strong, the stock market is up and interest rates are low.”
It takes an economist like my colleague at Action for Economic Reforms, Filomeno Sta. Ana III, to rebut your claims. However, as you can see, his work is meant for serious deliberation, not bumper stickers.
He said, “Exports, most affected by a continued peso appreciation, account for more than 40 percent of the country’s economic output. A peso appreciation makes Philippine exports more expensive.”
He added, “A peso appreciation makes the prices of competing imports cheaper. Hence, local producers lose market share, grabbed from them by imports.”
And he concluded, “In fine, the continued appreciation of the peso, leading to its overvaluation, is injurious to the real, productive sector of the economy, negatively affecting employment and income.”
The short version of what Sta. Ana said is, as the peso rises, exports become less competitive, imports become cheaper, manufacturing declines, domestic jobs become scarcer, and OFWs become heroes. Unfortunately, that progression is still too long compared to your slogan.
Sta. Ana and I want you to earn your Queen’s admiration so we spent hours looking for a riposte to your claims, one that would put your Queen’s “achievements” in the proper context and force you into a long-winded explanation of why, to use Casey Stengel’s words, she’s claiming credit for “all the home runs somebody else hit.”
Everybody knows Mrs. Arroyo relies on OFWs. Without their dollars, at least 60 billion since she came into power, and at least 14 billion more expected this year, she would be in deep doo-doo. But how does one translate that into one short and clear sentence? The answer came from our cleaning lady. She asked, “Saang kangkungan pupulutin si Gloria kung walang OFW remittances?”
Anyway, going back to the quotation I mentioned at the beginning of this letter, the one I placed right beside your seductive statement. . . it’s a reality check courtesy of a sign in a bar in Chapel Hill, North Carolina.
“No matter how good she looks,
Some other guy is sick and tired,
Of putting up with her sh*t.”
Looks aren’t everything, Toting.
All the best,
Buencamino writes political commentary for Action for Economic Reforms (www.aer.ph).
Former Justice Jose Melo, head of the commission that investigated extra-judicial killings, said retired general Jovito Palparan should be held responsible for the murder of activists in areas under his command.
“There are several pages there on Palparan. You know, he has said he inspired them. You can hook the fish through the mouth,” Melo said.
Meanwhile, Lt. Col. Bartolome Bacarro, AFP spokesman, said, “There could be individuals belonging to the organization who perpetrate such acts, but these are not work-related.”
What is “work-related”?
If a nun perpetrated those killings, then it’s not work-related.
If Palparan and his “inspired” soldiers spent their day’s-off killing civilians instead of resting, then they must have done it for entertainment. It’s just boys on the prowl for some excitement. That’s not work-related.
But Mrs. Arroyo praised Palparan’s “work” in her last State of the Nation Address.
She said, “…we will end the long oppression of barangays by rebel terrorists who kill without qualms, even their own. Sa mga lalawigang sakop ng 7th Division, nakikibaka sa kalaban si Jovito Palparan. Hindi siya aatras hanggang makawala sa gabi ng kilabot ang mga pamayanan at maka-ahon sa bukang-liwayway ng hustisya at kalayaan.”
So Bacarro must have forgotten to tell her that Palparan was not working. He was simply engaging in his favorite pastime and didn’t deserve praise.
Raul Valino, a columnist at the Business Mirror, writes about an unpleasant experience at the LA consulate. In contrast, he had nothing but praises for the consulate in San Francisco.
LA consulate: As cold as the weather
LOS ANGELES, California—It must be the Los Angeles winter weather, cold and biting at certain hours and days but warm at noon. Figuratively, the same can be said of the Philippine consulate in downtown LA, if the cold reception I encountered last week while trying to interview the consul-general by the name of Mary Jo Aragon is of any indication.
Not that I was complaining about the cold treatment I received from a member of the staff, an Asian male who gave his name as Amor, meaning love in Latino California. I was just disturbed by the unkind behavior he exhibited while I was at the consulate, the place “where everybody is welcome, especially a Filipino,” according to its website.
Gloria Arroyo told businessmen in Davos, Switzerland, “Vast opportunities exist, given the requirements of the Philippine Medium Term Investment Program, and these should be taken advantage of by the private sector.”
Guess who’s really going to take advantage of those vast opportunities.
Last Saturday, Mrs. Arroyo told Reuters news service, “I HOPE the economy will grow and we’ll have enough jobs at home so that our great Filipino workers will not have to go abroad to find a job. A job abroad should be a career option, not the only choice for a hard-working Filipino.”
Filipinos are also hoping that the economy wlll grow and there will be jobs at home. And they are praying that Gloria Arroyo will come up with a PLAN.
How’s this for a plan? “Almost every BPO (business process outsourcing) company I talk to tells me they want to double their workforce.” said Mrs. Arroyo. Call Centers!
Here’s another plan. Tourism… “because we have beautiful beaches and we have beautiful smiles,” she said. No wonder Mike Arroyo has a charity program called “free dentures for the toothless masses.” At least he’s doing something about the lack of infrastructure.
Eight million OFWs are going to come home to work in call centers and to flash their beautiful smiles at tourists. That’s THE PLAN.
This is a true story and was the First Place winner in the recent Criminal Lawyers Award Contest.
A Charlotte, NC lawyer purchased a box of very rare and expensive cigars, and then insured them against fire, among other things.
Within a month, having smoked his entire stockpile of these great cigars and without yet having made even his first premium payment on the policy, the lawyer filed claim against the insurance company.
In his claim, the lawyer stated the cigars were lost “in a series of small fires.”
The insurance company refused to pay, citing the obvious reason that the man had consumed the cigars in the normal fashion.
The lawyer sued… and WON!
In delivering the ruling, the judge agreed with the insurance company that the claim was frivolous. The judge stated nevertheless, that the lawyer “held a policy from the company in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire,
without defining what is considered to be unacceptable fire” and was obligated to pay the claim.
Rather than endure lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000 to the lawyer for his loss of the rare cigars lost in the “fires”.
NOW FOR THE BEST PART…
After the lawyer cashed the check, the insurance company had him arrested on 24 counts of ARSON!!! With his own insurance claim and testimony from the previous case being used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in
jail and a $24,000 fine.
Sigaw formally launched a new political party called Unlad Pilipinas, the Unity for National Advancement of the Philippines.
Raul Lambino and Jose Abueva, two Sigaw stalwarts, made the announcement at a press conference yesterday.
Lambino said Unlad had the full support of the nation-wide municipalities and league of councilors. He added that Unlad was the third force – the alternaive to Gloria and Erap.
UP secretary general Ferdinand Topacio immediately endorsed Lambino as a senatorial candidate in the still to be announced Unlad senatorial slate. Lambino politely declined. For now, he said. Ayaw pa niyang lumantad.
Once Lambino, Abueva, Carmen Pedrosa and Romella Bengzon announce their candidacy under the Unlad banner, the party will change its name to LANTAD. And hopefully they will be able to convince all those dead people who signed their people’s initiative to rise again from their graves and vote for them.
Sulong mga bangkay!
Hermogenes Ebdane told reporters he really wanted the Defense post. He added that he was the right man for the job.
He said, “They want a civilian to head the DND, but there are also a lot of problems in this agency that could only be addressed by someone from the Armed Forces.”
Ebdane is a former policeman. He spent his “military” career, first, as a constable in the PC and then as a policeman in the PNP. Policemen, like soldiers, wear uniforms. Security guards also wear uniforms. So do waiters, nurses, and airline flight attendants.
Ebdane, believes that wearing a baby-blue uniform is a license to call himself a combat soldier. He said, “In combat, you do not have the luxury of time to think for too long. Most of the time, you need to decide on what is inside your gray matter. That is the big difference between us in the military and the civilians.”
A little gray matter is all one needs to understand the difference between a soldier and a cop, the AFP and the PNP.
So, lacking gray matter, what other qualification would qualify Ebdane for the Defense portfolio?
First, he belonged to a secret group of election operators during the 2004 election.
Second, he was Garci’s minder when Garci mysteriously vanished from the face of the earth.
Most important of all, he’s a loyal Arroyo soldier. So in that sense, he can call himself soldier.
There are many who suspect that Sotto and Oreta will always be loyal to Erap. Nevertheless, Eduardo Ermita said they are welcome to join Mrs. Arroyo’s senatorial slate.
The administration is so desperate for candidates, it’s ready to abandon a guiding principle earlier enunciated by Ermita, “We’ll just have to first choose the correct candidates for the Senate and (who are) supportive of the President, especially in the House of Representatives, so that in the eventuality that anybody would wish to make a move on another impeachment, then we are assured that it will not progress because we have more allies in the House and in the Upper House.”
Except for Mike Defensor who volunteered, Oliver Lozano who begged to be included but was rejected, and Chavit Singson who got a strong endorsement from fellow governors but a weak response from Malacanan, Mrs. Arroyo can’t find anyone willing to run in her ticket.
So….what will Mrs. Arroyo’s senatorial slate look like?
Well, if Mike, Chavit, Vic, and Tessie are any indication, we can assume that Mrs. Arroyo’s ticket will be composed of toadies, swine, trojan horses, and horses’ asses.
A real zoo, in a manner of speaking.
The Exchange-Rate Problem
Filomeno S. Sta. Ana III
(originally published in BusinessWorld, Jan 22, 2006)
Mrs. Gloria Arroyo has repeatedly said that the rapid
strengthening of the peso reflects a strong economy.
Whether her belief in a strong peso derives from her
training in economics—she has a PhD from the
University of the Philippines School of Economics—is
Economists often disagree with each other. But on the
exchange-rate issue, every economist—mainstream or
unorthodox—accepts the importance of a competitive
Exports, most affected by a continued peso
appreciation, account for more than 40 percent of the
country’s economic output. A peso appreciation makes
Philippine exports more expensive. The unabated
appreciation of the peso will likely result in a shift
in the preference of consumers from the country’s
trading partners. Instead of buying Philippine export
goods that have become more expensive, they will opt
to purchase locally made goods or the export goods of
our trade competitors. In other words, Philippine
exports lose market share.
A simulation in a Philexport policy brief (unnamed
author, 2006) provides some insights. The simulation
results were drawn from a 2003 Asian Development Bank
(ADB) study titled “Investment Climate Survey.” The
survey involved about 700 firms in four manufacturing
industries, with export firms accounting for a third
of the sample.
The simulation assumed that the peso appreciated by
one percent vis-à-vis the US dollar. Conceptually,
the peso appreciation would reduce the cost of imports
but at the same time lower the amount of sales from
exports, with the assumption that the unit price and
the number of units made would remain constant. The
net gain or loss for a particular firm would depend on
its degree of dependence on export sales and import
On average, the simulation showed that all four
industries—food, textiles, garments, and
electronics—suffered declines in sales and gross
profits, notwithstanding the reduction of their direct
costs. Among the four industries, electronics,
accounting for almost three-fourths of the country’s
total exports, had the highest decline in gross profit
(-1.17 percent for every one percent appreciation of
On the other hand, net importers in the four mentioned
industries posted an increase in average gross profit,
thanks to the lower direct costs arising from local
But among net exporters, those in the food industry
suffered the highest decline in average gross profit
(-2.15 percent). Painful stories told by food
exporters are plentiful.
Producers of mangoes for exports had to absorb losses
because of sudden reversals of the exchange rate. In
early 2006, they had contracts based on a price
(exchange rate) of PhP53.00 to US$1.00, but then the
exchange rate appreciated to PhP51.00 to US$1.00. In
light of the currency movement, they pegged the price
of their next contract at PhP51.00 to US$1.00. Lo and
behold, the exchange rate moved again, this time to
PhP49 to US$1.00
William Tiu Lim, president of Mega Fishing
Corporation, also has a woeful story to tell. Mr. Lim
is not really a full-fledged exporter. His company,
the producer of Mega Sardines, mainly serves the local
market. At present, exports account for 10 percent of
the company’s total production.
Being an innovator, Mr. Lim nevertheless ventured into
exports. To improve the quality of his products mainly
for the local market, he realized that passing the
high quality standards for exports was the key. By
going into exports, his company had to meet the
exacting benchmarks (passing the HACCP or Hazard
Analysis and Critical Control Points) for food safety.
Unfortunately, the export side of Mr. Lim’s business
is seriously threatened. He says that he would have
to absorb significant losses arising from the current
exchange rate. He however cannot stop exporting
despite the losses, for the name of the game is
preserving his company’s market share. The question
is: How long can he and other exporters hang on?
Although the adverse effect on exporters is commonly
emphasized, it must be pointed out that domestic
producers for the local market, whose inputs are
mainly local, likewise suffer from a continuing peso
appreciation. A peso appreciation makes the prices of
competing imports cheaper. Hence, local producers lose
market share, grabbed from them by imports. A
qualification though is in order: The simulation done
for Philexport, using 2002 data obtained by ADB,
revealed a slight decline (-0.18 percent) in average
sales of net importers.
In fine, the continued appreciation of the peso,
leading to its overvaluation, is injurious to the
real, productive sector of the economy, negatively
affecting employment and income.
The irony, too, is that those dependent on the
overseas workers’ remittances will receive less pesos
for each inflow of dollar because of the continued
appreciation of the peso. A negative consequence of
this is a higher inflow of dollars from relatives
abroad to make up for the reduction of local currency
income, leading to the further appreciation of the
Indeed, without proper and timely institutional
intervention, the peso will continue to appreciate,
further undermining the macroeconomic fundamentals.
In fairness to the Bangko Sentral ng Pilipinas (BSP),
it has intervened in the foreign exchange market to
mitigate the strengthening of the peso. For example,
it has bought US dollars and has prepaid some of the
country’s foreign liabilities. It has likewise
signaled to the market by way of forecast that an
exchange rate of PhP52.00 to US$1.00 is feasible.
But the BSP can still be more aggressive in its
intervention. The constraint is that the BSP is more
concerned with taming inflation. A peso appreciation
contributes to lowering inflation, for it reduces
import costs. At the same time, a policy tool to
prevent further appreciation is to expand the money
supply to buy the dollars, which, however, can result
in inflation. It must be said though that current
inflation is already low.
The national government must likewise do its share to
prevent the further appreciation of the peso. For one
thing, it should refrain from further foreign
In economics, there will always be trade-offs. At the
present conjuncture, it is very critical that the
trade-off favor arresting the movement toward
overvaluing our currency.
Sta. Ana coordinates Action for Economic Reforms