Economics of hope

By Sylvia L. Mayuga
Philippine Daily Inquirer
Posted date: July 07, 2010

THE VERY DAY AFTER PRESIDENT NOYNOY Aquino’s inauguration, 180 overseas Pinoys paying their way from the United States, the United Kingdom, Canada, Australia and Saipan began a two-day conference on good governance at the Philippine Plaza Sofitel.

More obvious than their disposable wealth was their eagerness to help the new government they had worked hard to elect. These leaders had consulted their campaign chapters right after victory and agreed that there was nothing like a visit for updates, look in on P-Noy, and discuss what next right in the homeland.

Leading the charge was Loida Nicolas-Lewis, with her old anti-dictatorship sparring partner, lawyer pundit Rodel Rodis, who was pleasantly shocked when he was asked to represent overseas Filipinos in the “Panata ng Pagbabago” at the Aquino inaugural.

Their choices of whom to listen to at home were eloquent: Supreme Court Associate Justice Conchita Carpio-Morales whose dissenting opinions precede her, activist blogger Lila Shahani fresh from the Noy-Mar campaign, media good guys Maria Ressa, Cheche Lazaro and Mike Enriquez, Sen. Franklin Drilon who authored both the Dual Citizenship and Overseas Absentee Voting Acts, activist former senior government officials Karina David and Alran Bengzon, and long-standing Muslim leader Santanina Rasul.

New ideas popped like flashbulbs in a reunion of global Filipinos in a fluid moment of transition. Synching with a new President’s schedule meant sudden schedule changes as individual concerns flew thick and fast, like how well Filipinos at home used the media for clean elections, and how long overseas Filipinos must wait for corruption to be tamed enough to make capital investments without paying tong every step of the way.

A rousing sociology of change was upon us, but what really struck this student of the Asian economic crisis and its related global economic crisis was the presentation by professor Gil Ramos. It soon became obvious why Nicolas-Lewis asked him to present his ideas after meeting him as recently as the Noy-Mar campaign.

This immigrant Fil-American professor worth his college degree and doctorate in economics also has master’s degrees in urban planning and demographic economics. He was teaching managerial economics in New Jersey University and consulting with private firms in New York when the idea of how to hoist Inang Bayan out of her deepening quagmire of debt came to him midway into the Arroyo years. But still traumatized by the systemic corruption he experienced firsthand while working for the Presidential Commission on Good Government in the 1980s, no way was he going to share it with Arroyo. He watched her chalking up a sovereign debt of P5 trillion in nine years where her three predecessors chalked up only P1.464 trillion combined. It was doubly galling that she had little to show for it in the lives of the Filipino majority.

But Ramos’ heart would not stop beating for a homeland whose potential for vibrant economic growth he was sure of, if only corruption could be stemmed. After a landslide victory for righteous rule for a global Filipino nation, it was time to speak up.

Simply put, he proposes an all-Filipino “Marshall Plan” for overseas Filipinos to invest savings beyond their regular “consumption remittances” for their families back home. He put two figures together to project a possible increase in investments: the average 11 percent savings rate of Fil-Americans and the latest total OFW remittances of $20 billion for 2010. Should they come together with confidence in the new Philippine government, remittances could double and even buy back dollar debts with pesos to control inflation.

What kind of resources are we talking about? Ramos’ research revealed that what he calls “the Overseas Filipino Nation” (OFN) earns 23 times more per capita than Filipinos at home. While the home country is caught in a terrible vise of population explosion and ballooning debt-funded deficit spending, the OFN ranks next only to Switzerland in per capita income. Macro estimates are even more dramatic: projected Philippine GDP ($189 billion) is only 37 percent of the projected GDP ($492 billion) of 11 million Filipinos worldwide in 2010.

It was proven again that the hard work and generosity of Filipino OFWs equaled by their love of family is our most precious resource when the opposite of fearful forecasts of shrinking OFW consumption remittances in a worsening global economic crisis happened. Instead they increased by a billion dollars.

There are many more details to this proposal but its overall look is win-win: buying time for a new government to lift a distressed homeland by its bootstraps while building up a good return on investment, both financial and moral.

The moment seems ripe for the challenge of loving the Philippines enough to rescue it with more long-term investments that could buy all a better Filipino future at home and abroad. Seize the day, P-Noy!

For details, please e-mail Gil Ramos.
Sylvia L. Mayuga is a former columnist and editor of Inquirer.net.

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Mobilizing Overseas Filipino Investment Remittances through a Philippine “Marshall Plan”

What is being proposed is no less than an OFN (Overseas Filipino Nation) fueled investment inflow that is similar to the European Marshall Plan in the post world-war 2 era. In the original Marshall Plan some 13 billion dollars flowed from the US to Europe in economic and technical assistance for a period of 4 years from 1947-1951. This 13 Billion Marshall Plan postwar dollars translates to about 800 Billion in current terms (2010 prices) which meant an infusion of approximately 200 Billion dollars a year from the US into Europe for the 4 year period from 1947 to 1951.

The European Marshall Plan was considered a great success. By 1952 as the funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall plan recipients, output in 1951 was 35% higher than in 1938. So during these four years of the Marshall Plan not only did the participating countries of Europe recover from the devastation of WWII but they were also able to improve their economic condition dramatically compared to pre-war baseline levels.

It is already a stylized fact that remittance inflows into the Philippines has shored up the nation despite years of economic mismanagement. It is also known that these are mainly consumption driven remittances and hence it easily confounds economists who try to look for comparable multiplier effects that they are familiar with when dealing with hard currency inflows targeted for investments. It has also been seen that these inflows were relatively inelastic, impervious to externalities in the world economy and levels of confidence for existing leadership in the country.

The resilience of these remittances is due to the fact that they are need based and that they represent merely less than 4 percent of the total incomes that the population of Overseas Filipinos enjoy. This singular fact implies that if the OFN had more confidence in the Philippine leadership then they would be more than willing to dig into their deep pockets and invest with confidence in Philippine economic growth. Hence, the rationale for our Marshall Plan prescription.

For our Philippine version today of that Marshall Plan effort in Europe, we will need to mobilize an additional investment remittance amount of about 140 Billion US dollars on top of that same amount in consumption remittances during the six year period of P-Noys term for a total remittance effort of approximately 280 Billion (from 2010 to 2016). This means that instead of expecting just 21 Billion US dollars in consumption driven remittances by 2011 we should have a combined consumption and investment driven remittance inflow of about 42 Billion; then 44 B in 2012; 46 B in 2013; 48 B in 2014; 50 B by 2015; and 52 B in 2016. These remittance targets represent about 8 percent of projected OFN Income flows. From 2010 to 2016 we could expect OFN incomes to grow from approximately 550 billion in 2010 to approximately 740 billion US by 2016. Given the fact that the norm for Filipino household is a savings rate of somewhere between 15 to 20 percent, remittance targeting at 8 percent of projected OFN incomes is quite reasonable.

Of the US $ 140 billion investment driven remittance target for these six year period about 40 billion should be allotted to the external debt relief efforts. The estimate of our external debt exposure varies from about 42 billion US to 58 billion US . A lower target figure of 40 billion is used here since we should strive to negotiate a buy-down process in paying off our external debt – similar to the way credit card debt is negotiated for settlement at cents on the dollar. Singapore and China – are countries that enjoy relative independence and autonomy in their domestic economic policies (i.e. to IMF and WB conditionalities) because they have a very low proportion of externally held public debt. It is 8 percent for China and 2 percent for Singapore . The Philippines meanwhile has about 45 percent of externally held public debt. By shifting most of these debts into sovereign guaranteed peso bonds held by Overseas Filipinos, we will be freeing Prez Noynoy’s hand to pursue aggressive economic policies like cheapening the peso for export promotions and/or output/M1 targeting which is more of an activists economic strategy as opposed to the laid-back and sterile risk-averse inflation targeting that we now have in our monetary arrangements.

To achieve this admittedly ambitious goal the whole economic management machinery of government should focus on this massive fund mobilization effort. The usual practice of debt bond issuances should give way to more innovative efforts. Even the current announced plan of issuing peso denominated bonds in the international market pales against the requirements of the nation and the massive pent-up desire of elements in the OFN to help the country with a newfound confidence in the credible leadership of President Noynoy Aquino. Even the 8 point foreign policy program of the previous administration which list the Overseas Filipino as the 8th priority should now be stood on its head with the OFN given the top priority ranking that it deserves. The appointment of Community Consuls from among the ranks of Overseas Filipino Community leaders should be seriously considered to boost the ability to draw more investment remittance inflows into the country.

The crucial element here is to use a quasi- non governmental organization as the main instrument in mobilizing these investment remittances instead of the usual channels. The analogy is one of building a highway by administration rather than using a contractor. The Bureau of the treasury remains as the bond issuing fiscal agent but this time instead of dealing with the banking cartel, the government deals directly with the OFN residents through the Quango. The Quango , which will be known as the Overseas Development Fund (ODF) will be constituted with experienced private sector hands and organized in the caliber of the ADB, WB, IMF , and leading Banks with the corresponding pay scale. Shifting the external debt into peso held bonds will take approximately 3 to 4 years. Putting in sticky features in the peso bond design like debenture and lottery elements needs careful planning. Likewise, promoting other silver-bullet bonds like the teacher – debt relief bonds and the palengke micro finance bonds will also need some time and a high level of competence and professionalism.

There is no doubt that if Prez Noynoy can inspire OFN residents to invest in the Philippines in significant amounts our Philippine ' Marshall plan' will also be a success. However, this would mean that he would have held the ugly head of corruption at bay; developed efficient methods of production to decrease our capital output ratios; increase our savings rate dramatically; and jawboned significant factions of the Philippine economic and business elite to share wealth building business opportunities with OFN residents. With Prez Noynoy providing inspired leadership and with a very positive and sustained response from the OFN residents then perhaps the Philippines may have a chance -- a good chance at finally realizing the economic potential that we always had.
___________________________________________________
Read Sylvia Mayuga's Commentary: Economics of hope regarding her observation on the Overseas Filipinos for Good Governance conference held in Manila.

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• Gloria Arroyo's Lies Not Even Close!
• The First 100 Days of Pres. Benigno C. AQUINO III
• Expectations from a Noynoy Aquino Presidency.
• One Hundred and a Thousand Days – then a Thousand More!

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Gil R. Ramos Ph.d. finished his Doctorate in Monetary Economics and Masters in Population Economics at the University of Hawaii. He did his AB Economics and also a Masters in Urban Regional Planning both at the University of the Philippines. He currently teaches MBA students at the (New Jersey City University) NJCU in Managerial Economics, Corporate Financial Management, and Managerial Information Systems. He runs his own consulting firm GRR Analytics based in the New York / New Jersey area.

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Ka Edong was a happy warrior

He always had a smile on his face
and he faced life with the characteristic fate based elan typical of the Filipino Soul.

I had worked with him in building the OFW community of lists.
He was a prolific contributor and participated vigorously in efforts to build
financial infrastructures to facilitate OFW help for our homeland.

To say that he would be missed is quite an understatement.

Somehow we will go on
but his sunny smile would be difficult to replace.

Be at peace my happy warrior friend
say hello to Alfred Ganapin and ka Tonyang.
Tell them that those of us that remain
will man the ramparts as joyfully a you did
and we will try to mock up a poor copy of your patented smile.
till we meet again!


Gil R. Ramos
_____________________________________________________
Eric Lachica's account of Edong's last momnets before the stroke.


Ernie & Internet friends:-(

Last Sunday, I had a 830 breakfast with Dr. Eduardo "Ka Edong" Del Rosario of Guam and Dr. Rachelle "Chee" Garcia, a prominent community-based health advocate in Manila, who arranged our kuwentuhan at the Rockwell's Pancake House in Makati.

Ka Edong wanted to know the progress of our campaign of extending US Medicare coverage to the Philippines for balikbayans retirees and the recent victories of our Filipino veterans. I first met him at the 2001 NaFFAA regional conference Virginia Beach where he persuasively spoke on Medicare in the Philippines bill. He also joined the vets equity campaign.

He was our Guam coalition leader and a OF advocate who tirelessly worked with Delegate Madeleine Bordallo in pushing our bills. Guam residents now can fly to RP for medical treatment paid by Medicare since they are closer to the first class hospital there than those in Hawaii - thus saving Uncle Sam greatly in expenses.

We had a great bangus egg coffee rice sinagag combo.

He and I were diabetic, I commented that meals in most Manila restaurants and malls were not very healthy. No full-grain cereals, breads and vegetables etc. Most adult Filipinos now face diabetes, strokes and heart attacks. I commented that Filipinos should switch from white rice to brown rice like I did to lose weight. I try to regularly exercise by biking, kayaking and regularly walking in evening in Maryland.

Ka Edong who sat beside me joked not to worry because all of us carry our prescription drugs like metaformin. We then got into a highly animated discussion about the challenges facing medical tourism and future retirees from the USA.

We were about to leave for the Sofitel Plaza hotel where the delegates (100+) of the US Pinoys for Good Governance were billeted to discuss our ideas.

Dr. Garcia who sat across from me suddenly told me to leave right away since Ka Edong was having a stroke. I turned and saw Edong trying to speak but couldn't.

Dr. Garcia quickly summoned for an ambulance with help of black clad security men. She and I asked the Pancake House staff to carry Ka Edong to the curbside.

While waiting for 15-too-long minutes for the Makati ambulance to arrive (couldn't find the driver a few blocks away). Ka Edong despite his half paralyzed condition, grabbed his mini digital camera from his pants pocket with his good hand and handed it to me.

With his well-known humor, I guess Ka Edong wanted me to take pictures of his predicament to later share with you. Or possibly not lose the camera in the ER.

He died Tuesday at 7 A.M. at Makati Med. Cause of death: massive brain bleeding. Edong was 69.

Tonight, his wife Maribel and his 2 US-based daughter will lead Ka Edong's 7 PM memorial service at the Don Bosco Chapel of Hope on Pasay Road, Makati. His ashes will be immediately flown to Guam for internment.

I am pretty sure Ka Edong would be pleased for me share his last breakfast story.

I will seek the Maribel's permission to post his photos.

Eric Lachica,
executive director (volunteer)
American Coalition for Filipino Veterans

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Gil R. Ramos Ph.d. finished his Doctorate in Monetary Economics and Masters in Population Economics at the University of Hawaii. He did his AB Economics and also a Masters in Urban Regional Planning both at the University of the Philippines. He currently teaches MBA students at the (New Jersey City University) NJCU in Managerial Economics, Corporate Financial Management, and Managerial Information Systems. He runs his own consulting firm GRR Analytics based in the New York / New Jersey area.

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