Posted by: luvin | July 18, 2016

The Poor MSME

Helping the Poor or Funding the MSME, is quite interesting. 
 
For all and sundry, a dream to have and grow their own start ups is without doubt all embracing.
 
We all have heard how angel investors and venture capitalist have helped Facebook become what it is today. This is also true with Microsoft, Intel, Apple and many other giant firms today. Their early existence have been paved by the capitalist with the golden heart.
 
In the Philippines according to Philippines Statistics Authority, 99.6% of bussiness enterprise are MSME’s or micro, small and medium enterprises. The remaining .4% are the likes of PLDT, San Miguel Corporation, SM and other large corporation.
 
Among the 27 million poor Fiilipinos (26% of the population) are 942,925 MSME’s. The present administration is targeting a growth of about 8%. The most practical approach to achieve the growth is to continue with the macro economics espoused by the previous administration, with a caveat on inclusive growth.
 
The most common intervention is to identify poor communities and pour government resources with the hope of sustainability (because many of these high financed projects appears to only cause a Keynesian pump priming impact). Poor communities would tend to return to its original poor state after the interventions.
 
Looking at the MSME the assistance they got from the government in form of Capital infusion, technical support and the likes are pitiful to say the least. If each of the these MSME be provided an additional capital of about 3 million pesos each (of course this will be in form of loans), that would only be around 565,755 billion pesos, and it would have a direct impact on the 20% of the entire business environment. Assuming these micro entrepreneurs pays the loan in two to three years, the eight percent national growth target is achievable.
Posted by: luvin | July 7, 2016

Revenue Story 2

As I glossed over the data from BIR, NSCB, and the DBM, I’ve unearth so many figurative anecdotes very supportive of the proposal to shift to a Federal System.

NCR’s revenue collection at 1,152 billion pesos is far bigger than the rest of the country combined which is a mere 183,325 billion pesos. Almost a trillion peso disparity. The key contributor with this are the Large Tax Payers (LTP) and the Excise Tax Services (ETS) which are at 757,340 billion pesos. Almost 70% of NCR’s taxes comes from LTP and ETS.

This data tells us that a big portions of governments lifeblood (the tax) comes from the big business and the ultra rich Filipinos. There are two groups of them, the old landed rich whose money are rooted from sugar, land rent, logging. In short they became rich by exploiting our natural resources. The second group are the Tycoons, the chinoys whose wealth came from hardwork and business skills. The conglomerates they own do business all through the country.  These are the people who are enjoying the 6 to 7 percent economic growth. Why is this so?

The government is telling us since time immemorial that there is not enough money for everybody. Though this reason is no longer acceptable at this time still 26% of Filipinos remain poor.

 

 

Cordillera Autonomous Region (CAR)  contributed to the national coffers a measly  4,325.82 billion.  They are in the same company as Zamboanga Peninsula which contributed 4,349.08 billion pesos and CARAGA which contributed 3,806.53.  These are the host to most of the country’s mining industry. And these two regions are prominently present among the poorest regions in the company of ARMM, MIMAROPA, Eastern Visayas, SOCCSSARGEN, and Bicol.

And how are the funds allocated per region. We will not examine the Departmental Budget allocation because we already know that it almost becomes discretionary. When a DA Sec is from Tarlac we expect more Agri projects to fall into the  lap of his kababayans. It is no different with our Senators. Just take a look at the projects Sen. Drilon poured in Iloilo, in the same manner that Enrile poured resources to Ilocos during his heydays.

The saving grace is the institutionalized share most commonly know as IRA or Internal Revenue Allotment. Luzon minus NCR got 192,468 billion pesos. Visayas-81,823 B php. Mindanao-117,436B php.

Posted by: luvin | July 6, 2016

Revenue Story

There are several suggestions on the number of Federal States to be created. There’s the 1o states and one administrative region, as suggested by CMFP (Citizen Movement for Federal Philippines). Which is similar to the proposal of Sen.Nene Pimentel in Senate Resolution No. 10.

Another proposal is to have 5 Federal States. Luzon, Visayas, Mindanao, BangsaMoro, NCR or the Administrative Capital which is not really an  state per se but as capital of the whole country. The suggestion of the incumbent President is to create two separate states for the Bangsa Moro, one for the inland Moros, and another for those in Sulu, Basilan, Tawi-tawi.

Mindanaoans and Bisaya (representing Visayas) are the most vocal advocates of Federalism. Of the ten poorest provinces, two are coming from Visayas (Siquijor, and Northern Samar) while Eastern Samar is at number 11. Eight of the ten poorest provinces are from Mindanao.

If we are to draw a picture of where the national government gets its money the picture below  would show how small are the revenues coming from Mindanao.It is also to be noted that one third of Mindanao’s 37,946 billion revenue are from Reg. 11 or the Davao Region (12,423 billion).

 

bir pie chart

(the figures above are in billion pesos)

It should also be remembered that 71,834 billion pesos of Luzon’s revenues are coming from Reg 3 -Central Luzon and Reg 4-CALABARZON. These two regions are close to NCR.

Assuming we are to create three Federal States; namely, the Federal State of Luzon, Federal State of Visayas, and the Federal State of Mindanao, where would these newly created states get their revenue? Can Mindanao develop depending on its 37,046 billion revenue? For an island so big, 37 billion is disproportionately small. In the proposed BBL, the government planned an allocation support of 37 billion per year, an amount our congressmen think are necessary for the Bangsa Moro to develop.

At first view the graph would show how small is the economy of Mindanao. While the graph is telling us of how badly distributed the industry and are in this country, it also tells of a story where  taxes are being paid. Most of Philippine business enterprises have HQ’s in NCR.

While those who are against Federalism ask where will the poor regions get the needed revenue, the bigger question should be;  where goes the big chunk of our taxes?

Posted by: luvin | July 4, 2016

Government Transactions and Federalism

Since we are now in a Federal shift mode, let us deconstruct this idea brick by brick, evaluate the idea a bit at a time.

There are pros and cons. I will not limit my study on the good only, for surely there are pitfall which advocates must be wary of.  But this must not be the deterrent, rather we must try to find solutions to what ever obstacles that may crop up ahead of this journey.  This has already been a long struggle for change, and this shift to a Federal system is the ultimate change that could happen to this country.

The last couple of years we have experience power disruptions and the reasons given was due to strong demand and there are just not enough supply. The worst situation is in Mindanao where the main source is now considered old. I can not understand why the government would wait for the power plant to malfunction before it builds a newer plants, or why don’t the operators of these power plant do a regular maintenance, but that is not the point here.

Mindanao is a land endowed with so much natural resources, those rivers crisscrossing Mindanao are resources begging to be exploited. If all Mindanao LGU’s that have a river nearby (certainly there are many) would build their own mini hydro plant, a  bright side will emerge from  this rather dark energy shortage.

Under the present government system, is this doable? Maybe yes, with so much greasing along way it could be done. Any new entry into this endeavor will easily agree that it is not easy to get the permit. Can you imagine what happens with those application as it dives deep down the bureaucratic ocean? There are so many sharks waiting to get a taste of your flesh. Some are not even content to bite a bit, there those who would like to swallow you in whole. Many of these application won’t come out alive.

This happens when the governmental set up is huge, the tentacles-the so called measures against corruption- are the very same tentacles becomes the obstacles that allows the evil to flounder. In a Federal system, the applicant must contend with a smaller foe. The decisions are made locally so it won’t that much difficult.

The people also will be aware of this kind of transactions and they can actively be part, or they can held their leaders accountable easily.

Posted by: luvin | June 29, 2016

The Judiciary In Federal System

Having lunch with my daughter who is studying law, our discussion delve into what would be the Judicial System if Philippines is to shift to a Federal System of Government? There are still many spaces to fill, and my views are just a product over the table discussion that I found interesting, I don’t pretend to be a legal expert, I just find this topic interesting.

At present the Judicial system in the Philippines are criticized for performing below expectation. It is slow in resolving cases, ridden by corrupt practitioners whom one President referred to as hoodlum in robes.

A court case specially those civil in nature would take a lifetime to reach final resolution giving it an apt description of  ‘justice delayed is justice denied.’ The reason given for this dismal performance are: lack of judges, lack of prosecutors, lack of lawyers, the courts are clogged with cases  that many are petty conflicts.

What would happen under a Federal system?

There would be several courts in the country. The Federal Court, the State Courts, and the Shariah Court. The Ombudsman could also be retained.

The State Courts will hear cases falling under the jurisdiction of the state. There will be a State Supreme Court, Provincial Trial Court, and Municipal Trial Court. The Court of Appeals will still be there but this time there will be one for every Region or State.

The final arbiter would be the State Supreme Court, while those cases which are of Federal or National concerns will be heard in the Federal Court. The composition of the Federal Court would be a representative from the different State Supreme Courts. The Chief Justice must be replace every five years with each representative justice replacing each other, one after the other.

Since there will be fourteen or fifteen Supreme Courts, the final review of each case would be much faster.

In states where there are Shariah Courts, lawyers who would like to practice in that state must first passed a bar examination specific to that State. The Shariah court will be present in Bangsa Moro State or States.

 

Posted by: luvin | June 28, 2016

After The Rain

After The Rain

The river is alive again,
Water splashing, cascading,
As is, it’s nature singing.

A sense of peace
In a mist filled moment.

Posted by: luvin | June 27, 2016

Federal Alternative

The desire to have the freedom to choose, the freedom to be your own master is a universal nature.  It is understandable that the  yearning for self-determination is so strong for people who have suffered discrimination.

When the people are oppressed, when the land are exploited, those who are left behind naturally would demand for an equitable distribution of their rightful share.  The people’s yearning for progress and development will never ceased specially when they feel that their supposed protector-the government- are found most often bending to serve the interest of the few.  When the government can not be found to protect its people, we can’t blame the people if they would protect themselves.

The unitary government that we have today failed to improve the lives of so many Filipinos. One of every four Filipinos or  26% of the population are still mired in poverty. And this has been the case for so long. It is easy to surmise, our unitary government failed to deliver the goods. It is no longer the choice, it is also no longer the alternative.

There are sectors in this country who have suffered neglect for so long. Can we blame them if they seek to correct this injustice? Should we blame them if they no longer trust? And that they would rather find their own solution according the dictates of their culture and tradition?

On the contrary, for so long, those who are in power showed contemptuous attitude towards this desire for self-determination. When the Regions (the people through their leaders) clamored for more equitable share of the nations revenue, many who felt so comfortable under the protective armpit of this unitary system said no.

Now that Federalism is given a fair shot, there are those who would object to the proposition. To be fair though, some of their observations are valid.  One most common issue against Federalism is hurled against local leaders, who many are wont to be dynastic. If we shift to a Federal system, these local political dynasties will be  in power forever enslaving the people till time immemorial.

We can however institutionalized the vetting process for our leaders. We can have a strong party system where the leaders can contest among themselves and where the best leader may be given a chance to lead. During the  writing of the State Constitution, an anti dynasty law can be clearly stated. Ex. A leader will be allowed one term of  four years and one reelection only. No relatives up to 2nd degree of consanguinity will be allowed to run in the next eight years.

Another issue against Federalism is on revenue. It is a fact that many poor LGU’s are IRA dependent. Where would they get their revenue to finance the needs of the government? ARMM for example have few industry to speak of, the people are poor, their are no big taxpayers, corporate or private. So where will they get the financing?

These are birth pains that needs not be ignored. Of course there are donor agencies. The richer regions can also help. Ex. For the next ten or fifteen years, 10% of the richer regions revenues will be earmarked for the poorer region. This approach will give the disadvantage regions a sort of a starting capital.

There are many ways to solve the initial problems. But what other alternative do we have?  With the recent Brexit decision we have seen, some people advises the proponents not to rush. So under the present set up, what alternative do we have? If too much centralization of power is the root of all corruption, then devolution of power could be the answer. The national government can retain responsibilities of national concerns. Ex: Foreign Affairs, National Defense, Education, etc.  Taxation should be devolved to the local governments, and they will remit the equitable portion to the national government. The percentage will be determined proportionately to the amount of necessary to run the affairs of the national government. This way the power of the purse now shifts to the Region.

This way we will retain the unitary system with less power concentrated within the center.The regions will also be given ample time and opportunity to prepare for the eventual shift to a Federal system.

Posted by: luvin | June 15, 2016

Killing the Bandits

Murder is unacceptable in a humane society. The same goes with its synonym, killing. But when eliminating some bad elements in society, our dogmatic view of killing would be distorted. “Killing the bandits” would appear to be acceptable. Of course it is legal when done within the legal framework, but how about when achieved through  vigilantism or an eye for an eye perspective?

Let us take a look at the recent beheading of the Canadian hostaged by the Abu Sayaf. The international as well as the national community are outraged by the beheading. Would the United Nation shout in high heavens of inhumane act if some group, or even the government, exert enough effort to exterminate this group. The Government of course has the manpower and the logistical power to pursue these vermins and dump their souls into the armpits of hell.

There are a few hundreds of them left, and the intelligence community knows who they are, where they are holed, who they are with. They are vulnerable, and they could be killed in mass or one by one. But if done in this manner, can our moral sensibilities accept this incidence? Shall we be tolerant to these kind of killing, but intolerant to the salvaging of druglords?

 

Posted by: luvin | June 14, 2016

On Becoming a Farmer

Though I have recently met people who are so ecstatic about farming, they, however, are more interested in the business aspect of farming, and are obviously attracted to relax farm life as oppose to city life. Farming as we know here in the Philippines is not something to really dream on. Rare is a Filipino farmer who would like their children to also become a farmer like them.

The state of Philippine Agriculture according to IRIN is like this;

“The average age of the Filipino farmer is 57. Assuming an average life span of 70, we might reach a critical [shortage] of farmers in just 15 years,” said Asterio Saliot, director of the Department of Agriculture – Agricultural Training Institute (DA-ATI).

“The average level of education of a farmer is grade five only,” he added.

According to Saliot, farmers’ age and limited education make them less receptive to new farming technologies that can boost yields in the face of growing losses from volatile weather.

Weak government policies and programmes, an excessive reliance on agricultural imports, and corruption, have taken their toll on the agricultural sector, say experts.

According to the 2012 Bureau of Agricultural Statistics, the agricultural sector employs an estimated 12 million people, making up 33 percent of the country’s labour force. About 70 percent of the rural poor are farmers and fishermen.

Though the sector contributes about 11 percent to the country’s GDP with US$14.7 billion, 2011 government investment in the sector was only 4 percent of the national budget.

That year total government spending on agriculture was $1.6 billion, almost 24 percent lower than the previous year.”

There was a clear neglect from the government and there is a apparent lack of skills and knowledge from the farmers side.

Having these data, common sense dictates to avoid this sector.  To become a rice farmer is no longer a choice, but those who opted to be one are left with no choice at all.

Posted by: luvin | June 13, 2016

The Flying Geeze Paradigm in the Philippine Setting

The flying geeze paradigm in Philippine setting. The lead gooze in the country is of course is the National Capital Region (NCR).  With Central Visayas, and Davao Region as the two regions flying beneath the wings of the leader. What is interesting about this is the idea that “as the comparative advantages  of the “lead goose” causes it to shift further and further away from labor-intensive production to more capital-intensive activities it sheds its low-productivity production  further down in the hierarchy…”

Flying geeze theory is  “Akamatsu Kaname’s theory of the flying geese pattern of development.  This theory explains how an undeveloped country can become developed relatively quickly. The undeveloped country adopts suitable labour-intensive industries from more developed countries. It produces first for the home market, but starts to export as soon as the industries have grown strong enough. Initially, products are simple, crude and cheap, but gradually the level of quality is elevated. The procedure is repeated over and over again, leading to a rapid process of national economic development.”

Application of this model in local economy c nsidering the fact that economic characteristics of nations are but mirrors of regional economy. Early on, Japan was the lone economic miracle that made waves in Asia, and as it progresses, the labor intensive industries found its way to other countries.  Lately China took the lead role, but is now slowly and clearly easing out of the way.

In the Philippines, though NCR or  Mega Manila has been on the lead role for centuries, it is very apparent that growth in that regions has reached saturation point, and that a new leader must emerge for the country to progress further. The one hurdle that needs immediate action is this. Is Mega Manila ready to relinquish the lead role? And what role will it take now, specially with the unexpected shift of political power from Manila to Davao.

Mindanao has been the the agri/agro producers of the country. Is this now high time for it to shift to a less labor intensive industry? And what industry would that be?

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