Uneasy like Sunday morning

(This is a draft of a chapter of a commissioned biography. Permission to publish it in its raw form has been secured on the condition that the names of persons and some companies be changed.)

It wasn’t exactly easy like Sunday morning.

But it was nevertheless the last day of the weekend, a day when people sat back, put their feet up, and relaxed; a day when the world took things slow and shifted to a lower gear, the better to prepare for the accelerated pace of another work week.

For Antonio Valencia (not his real name), June 16, 1974 was a Sunday unlike any other.

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Three suggestions from Raul Fabella to boost the Philippine economy

Fabella: A weaker peso protects local producers without mechanisms like tariffs (Pic from UP Economics Society)

THE last time National Scientist and economist Raul Fabella clamored for the peso’s devaluation, a powerful but low-key government body ‘encouraged’* a newspaper columnist to criticize him and other economists who shared the same opinion. [See: Raul Fabella]
Or at least that’s what Fabella claimed after he delivered a lecture about the benefits of a competitive currency at the University of the Philippines School of Economics last November 24.

A bet, a beer, and a book by Alran Bengzon

Alran Bengzon, author, Ramon Magsaysay Awardee, among others.

Two beers and peanuts — that was the bet.
However, something else was at stake.
It included my self-respect and net worth, both of which have remained at abyssmally low levels for reasons far too complicated to explain, like the President’s thinning hair.
If I agreed, I was pretty sure that whatever was left of my pride and whatever remained of my pesos would be shortly wiped out.
But then again, it was a friendly bet.
Whatever the result was, whoever wins or loses, it was always a reason for celebration; a time for friends to get together again.
Red Constantino, author and Chief Prankster of the Kamuning Republic, wagered that I would be unable to fulfill my vow of refusing to buy any book until the year ends. [See: Red Constantino]
That’s what he said when he wrote comments to a previous blog entry. [See: graphic below, blog entry]
Karl B. Kaufman, friend, ex-co-worker, and a heavy metal fan, also expressed his sentiments, jocular as expected. [See: Karl Kaufman]

In any case, I may already owe Red a beer or two and a platter of roasted highland legumes.
Why?
I may soon buy another book. The one I’m reading now has a major misprint.
On Monday night, while absorbed in Alran Bengzon’s A Matter of Honor — which was about the negotiations covering the US Military Bases in the Philippines — I discovered that I read one passage twice. [See: Alran Bengzon]
The page after the page I was on — 154 — was not 155. It was 91. And the pages 155 to 170 were nowhere to be found.
I “received” the book from the author himself, who, when he was Health Secretary of the late President Corazon Aquino, was appointed as vice-chair of the panel that negotiated with the Americans regarding the US military bases in the Philipines.
In the late nineties, a few years after his book was published, I was able to sit down and interview Bengzon when I was still a reporter for BusinessWorld.
To help me write my feature story, Bengzon was kind enough to lend me the book on the condition that it would be returned.
Like the Rapture, that never happened. (Again, my sincerest apologies, Secretary Bengzon.)
Instead, more than a decade later, while reading his book again, cover to cover this time, I encountered the major printing error, which in turn, has prompted me to admit that yes, Red Constantino is right on the money.
I plan to buy another copy of Bengzon’s book, if only to read the 16-page gap, all before the year ends.
After all, A Matter of Honor is worth every word, prompting Filipinos to think about how they think about their country.

“We must teach ourselves, as individuals and as a nation, to permit no separation between ends and means, between who we are and what we do, between serving the truth and getting ahead. Then and only then can we finally build the nation of which we all dream — a nation that will be peaceful and proud, prosperous and free.

The book is also about how Filipinos kicked the US bases out in 1991 despite internal challenges, both political and economic, that the government was facing at that time: incorrigibly corrupt officials, a restive military, record amounts of foreign debt, escalating oil prices, depleted dollar reserves, a devastating earthquake, a paralyzing volcanic eruption, donor fatigue, among others.
All these and more are weaved in A Matter of Honor, an excellent historical narrative written by Bengzon with assistance from Raul Rodrigo. (And to think that I’m just on page 154.)
Having said that, a new and hopefully error-free copy of the same book might be hard to come by.
I was told by a National Book Store staffer that their only remaining copy is at the Mall of Asia branch.
Question now is: Will I make that two-hour trip to Pasay from Quezon City just to buy the book?
That depends.
I might just ask NBS to bring it to a branch close by.
Or I can have someone in the area, some good soul, to buy it for me. I’ll pay him back, of course.
Who knows? I’ll probably throw in a beer and a platter of peanuts for good measure.

———————
From the Credits Dept. Picture of Alran Bengzon from the Ateneo Graduate School of Business website which can be visited from this page just by clicking on the photo.

On Terminating the Philippine-US Bases Treaty

“Today marks a historic moment for all Filipinos. We have taken the first step in terminating an agreement that was executed in 1947 during the days of lingering US colonialism. This morning’s action of the Philippine panel signals to the nation a resolve to chart a new and truly independent course in which all dealings with foreign governments shall uphold the dignity and sovereignty of the Philippines. All Filipinos must bear in mind that ours is one nation, with one future. We must continue to build a nation which is peaceful, prosperous and proud — a nation for ourselves and for our children.”

— The Philippine Government, represented by the Philippine Panel on the US Bases Exploratory Talks, issuing a Notice of Termination of the 1947 Military Bases Agreement on May 15, 1990, a day after both countries formally held exploratory talks about the matter at the  Central Bank (now Bangko Sentral ng Pilipinas) building in Manila. The announcement above was read by panel spokesperson and then Tourism Undersecretary Rafael Alunan (who would later become Local Govt. Secretary) and cited in the book, A Matter of Honor: The Story of the 1990-91 RP-US Bases Treaty written by ex-Department of Health (DOH) Secretary Alfredo R. A. Bengzon, who was vice-chair of the Philippine panel

A bold forecast

While at the helm of the Philippines' central bank, Amando Tetangco Jr. was able to help boost economic growth to its highest levels in more than three decades.

[Blogger’s note: Here’s another piece — an editorial — written by Arnold Tenorio, the Manila Times’ business editor, for the paper’s February 21, 2011 issue. The piece may be “dated,” he himself told me in an email message, since “it was written before the BSP raised policy rates.” [See: Manila Times]
“But I believe the value of this piece is that it pointed out the structural impact of OFW [Overseas Filipino Workers’] remittances and to a lesser extent of the BPO [business process outsourcing] sector not only on the [Philippines’] external payments position, but also on GDP [Gross Domestic Product], particularly PCE [personal (or private) consumption expenditure],” his email said. “As always, I appreciate a little space in your precious blog. Thanks.” (Yeah, right.) So here you go, another piece by Arnold.]

THE Bangko Sentral ng Pilipinas (BSP) forecast of a seven to eight percent growth in the country’s gross domestic product (GDP) this year is the boldest official pronouncement yet of what’s in store for the domestic economy this year.

Speaking before members of the country’s organization of business journalists, BSP Gov. Amando M. Tetangco Jr. said GDP growth would come in faster than the 34-year record of 7.3 percent last year given the uneven growth trajectories of the advanced economies on the one hand, and their emerging peers on the other.

The BSP chief also pointed to higher interest rate differentials, which have benefited emerging markets in terms of a greater share of capital flows.

In fact, monetary authorities recently raised their forecast for the country’s balance of payments (BOP) to reach $6 billion to $8 billion this year, and our gross international reserves (GIR) to hit a record $70 billion.

Aside from these international developments, Tetangco pointed to the BSP’s macro-prudential measures, which have prevented asset bubbles from emerging in the Philippines.

According to the governor, asset valuations in the country have yet to reach bubble-like proportions because of the strong underlying macro-fundamentals and the BSP’s prudent regulatory framework, which has provided safety valves and has channeled resources to those sectors that most need them.

All these local developments have contributed to the country’s low and stable inflation, in stark contrast to the surge in prices among neighboring emerging markets.

This is why, the BSP insists, they are not behind the curve as far as monetary tightening is concerned.

According to our monetary authorities, the Philippines has been among the few countries that have enjoyed positive real interest rates, thus requiring no policy tightening despite the return of what appears to be the inflation surge of 2008 all over again.

In the Philippines, inflation last year averaged 3.8 percent, at the low end of the central bank’s target of 3.5 to 5.5 percent.

A crucial factor explaining this low inflation environment is the country’s ample GIR, which in turn is a function of the Philippines enjoying BOP surpluses in recent years.

Last year, our GIR grew by 40 percent to $63.608 billion from $45.591 billion in the same period in 2009, reflecting a new record high.

The country also registered a BOP surplus of $14.403 billion, or 124 percent higher than the 2009 surplus of $6.421-billion. The 2010 surplus was more than $6 billion higher than the revised $8.2-billion forecast for the period.

Largely contributing to this whopping performance was the rebound in exports, as global trade flows recovered from the slump of the previous two years.

In the particular case of the Philippines, two other factors that led to the robust external payments position were the resilience of overseas Filipino worker (OFW) remittances and the country’s growing share of the outsourcing and off-shoring market.

Money sent home by OFWs rose to a new record of $18.763 billion, slightly exceeding the BSP’s forecast of $18 billion for 2010.

As for the country’s share in the global outsourcing pie, anecdotal evidence points to the Philippines’ lead as far as employment levels in the call center segment alone are concerned.

What the two phenomena — rising OFW remittances and call center employment — suggest is that the Philippines not only has strong sources of foreign exchange besides the traditional external trade of merchandise goods.

Equally, if not more important, is that the country has a steady and growing source of dispensable income, which fuels personal consumption expenditure (PCE), heretofore the main engine of Philippine economic expansion.

That PCE didn’t contract owed to the steady income of these two demographic groups — OFWs and call center agents.

They are the heroes who helped prop up the Philippine economy amid the worst global financial crisis in decades, and — we suspect — the same groups that would sustain our growth this year and well into the medium term.

Companies are aware of the two groups’ economic influence, and have since deployed their marketing efforts to corner a piece of their incomes.

We hope the government likewise would realize this potent force that has prevented the domestic economy from unraveling during the depths of the recent global crisis.

From where we stand, the OFWs and call-center workers most likely will be responsible for a big chunk of the bold economic growth forecast set by the BSP.