While the country’s gross domestic product (GDP) expanded an impressive 6.6 percent in 2012, a high and sustained pace of growth is crucial to generate substantial poverty reduction. To be sustainable, this growth should be broad-based across many sectors and inclusive of the large part of the labor force.

The conditional cash transfer program of the government should be accompanied by an inclusive growth strategy for sustainable growth and poverty reduction.

Jobless growth

We need an inclusive growth model in which the industrial sector, particularly manufacturing, plays a key role in generating investment, employment and innovation. As Josef Yap, president of the Philippine Institute for Development Studies, said there are more high-productivity, high-paying and quality jobs in manufacturing.

While the services sector has provided a major source of value added and employment in the past two decades, since the mid-2000s, the average unemployment rate has remained high at 7.6 percent while underemployment has stayed high at 20.14 percent. Though the country’s economy has expanded, its impact on employment creation has
been characterized as jobless growth.

Revive manufacturing

To lead the country’s sustained and high growth level, manufacturing needs to be revived given its weak performance in the past two decades. From the 1980s up to the early 2000s, manufacturing growth was slow, averaging 0.9 percent in the 1980s and 2.5 percent in the 1990s. Modest growth was posted in the 2000s with an average of 4.1
percent.

The average share of manufacturing in total output dropped from 28 percent in the 1970s to 26 percent in the 1980s and to 24 percent in the 1990s up to the 2000s. In terms of employment contribution, the manufacturing industry failed in creating enough employment to absorb new entrants into the labor force as its share of total employment declined from 11 percent in the mid-1970s to 9 percent in the 2000s.

Development progeria

It is evident from the foregoing that the trade reforms of the 1980s did not transform the agriculture-based economy into a manufacturing-based economy and did not lead to rapid industrial growth.

According to Raul Fabella, a national scientist, the economy is suffering from development progeria or premature aging. This is manifested by the rise in the share of services and a fall in the share of industry and manufacturing sectors. While our neighboring countries registered substantial increases in the share of industry, the share of industry in the Philippines declined and remained stagnant.

Exports less diversified

The Philippine manufacturing export base has become less diversified as our exports are largely concentrated in three product groups consisting of electronics, garments, and machinery and transport equipment. Within these major product groups, exports are highly concentrated in low value-added and labor-intensive product sectors that are considerably dependent on imported inputs and have weak backward and/or upward linkages with the rest of the manufacturing industry.

In terms of the product space, Dr. Norio Usui, Asian Development Bank senior economist, characterized the Philippines as hollow since most of our products are in the periphery, like natural resources, primary and agricultural products, and very few are in the core area.

At the core of the product space are capital-intensive machinery, chemicals and metal products. Successful countries are dense at the core. In the Philippines, our product structure has many empty spaces at the core since it is largely dominated by weakly linked products in the periphery.

The industrial structure, measured by firm size or number of workers, has also remained hollow, with a very small proportion of small and medium enterprises (SMEs). The linkages between SMEs and large enterprises have also remained weak. SMEs have continued to face competitiveness problems and are continuously beset by difficulties in financing as well as technology and market access.

Most binding constraints

The lack of infrastructure and weak investor confidence arising from governance issues and weaknesses in the larger regulatory environment and investment climate are the most binding constraints affecting industry growth and entry of new firms.

Firms continue to face major constraints such as poor infrastructure and logistics; lack of domestic raw material suppliers, parts and components; bureaucracy, red tape and policy inconsistency; and lack of highly skilled workers.

Smuggled products

At the same time, domestic manufacturers have continued to suffer from the unabated entry of smuggled and substandard products and from high power and logistics costs.

Broken linkages in the supply/value chain characterize many of our industries. The lack of materials processing has severely affected the competitiveness of the Philippine parts and supplies industries, and hampered the ability of high-technology industries to move up the value chain.

Weak backward links

Due to weak backward linkages within the manufacturing industry, automotive and electronics have continued to rely on imported parts and remained at the assembly stage of the supply chain.

In the iron and steel industry, which is critical for the manufacture of parts and equipment, competitiveness issues have remained due to the high cost of raw materials (apart from the high costs of power and logistics, unabated smuggling and limited government capacity to monitor product standards).

The local tool and die industry has to compete heavily against imported dies and molds while its backward linkages are weak due to the unavailability of most raw materials, equipment and software.

Special steel and casts, general and specialized metal machines, and software are all imported. Labor is the only component of the value chain that is locally sourced. Though the country has natural resources that can provide important metals like iron and copper, there are no processing plants (capital-intensive blast furnace and steel-making facility) that would produce the form of metal that the industry requires. There is no reliable aluminum-casting facility for molds used in molding large plastic components like refrigerator liners.

In the export-oriented copper industry, firms have hardly any linkage with the domestic economy. Copper ores are all exported and although the country has a copper smelting facility, it imports 100 percent of its copper-ore requirements and exports 100 percent of its output due to the absence of a copper-rod facility. Manufacturers of wiring harness, a major export product and user of copper rods, import all of their copper-rod requirements.

New industrial policy

Given its popularity and high trust rating, the Aquino administration is expected to continue implementing solid reforms to overcome the difficult challenges in realizing the country’s potential. Now seen as a new growth area, the Philippines is well positioned to attract investments that would catalyze growth and development.

The government needs to capitalize on our recent investment upgrade to attract more foreign direct investment. Large market opportunities for our industries are offered by the Asean Economic Community market of 600 million people. At the same time, the rising costs in China, and the calamities in Japan and Thailand that hit industry supply chains have driven investors to look for alternative investment sites.

Lay foundation

A new industrial policy is needed not only to generate jobs and reduce poverty but also to take advantage of these market opportunities. To lay the foundation of becoming a major growth driver, upgrading technology and transforming the manufacturing industry are required.
Industrial policies are crucial in enhancing firm productivity, deepening linkages of domestic firms and SMEs with large domestic and multinational companies, and aggressively courting more investment. Policies will also be necessary to boost the survival of new entrants and provide assistance for the growth and development of SMEs.

To enable firms to move up the technology scale, programs should be formulated to improve technological and human-resource capabilities as well as to strengthen supply chains. For these to be effective, infrastructure, logistics, governance and regulation issues must be addressed.

Learning by doing

In the short run, the policy focus should be on strengthening and rebuilding existing capacity of industries especially those with strong potential to generate employment, address missing gaps, and create linkages and spillover effects in sectors such as automotive, electronics, food, garments, motorcycle, shipbuilding, chemicals and allied or support industries. During this initial stage, policies and programs should aim at exploiting economies of scale and learning by doing.

In the medium-term and as domestic capacities are reached, efforts in the initial stage should lead to expansion and new investments, especially in the upstream, intermediate or core sectors such as iron, steel and other metals as well as in parts and components industries.

By linking manufacturing with agriculture, construction, mining and services, supply-chain gaps will be addressed and forward and backward linkages strengthened.

In the long run, a globally competitive manufacturing industry with strong forward and backward linkages is envisioned as the Philippines plays a vital role in the regional and international production networks of automotive, electronics, garments and food.

While the private sector is seen as the major driver of growth, the government has an important role to play in coordinating policies and support measures that will address obstacles to the entry and growth of domestic firms.
In the short run, the granting of hard industrial policy measures like fiscal incentives is not the most binding constraint affecting the growth of most industries.

Industry analysis and consultations show that close coordination among government agencies and effective policy implementation are the most crucial factors for industry development. Implementation of legislation; strict enforcement of product quality standards; measures providing access to raw materials, intermediate inputs and common service facilities; and aggressive investment promotion and marketing to attract investments are some of the immediate measures that the present administration can put in place.

Recommendations

Address gaps in industry supply chains.
Expand the domestic market base to allow industries to attain economies of scale and to export.
Design human resource development and training programs to improve skills, and establish tie-ups with universities and training institutions.

Support SME development through the establishment of common-service facilities and innovation, and R&D activities.

Pursue aggressive promotion and marketing programs to attract more foreign direct investments, especially those that would bring in new technologies.

Continue to address the high cost of power and domestic shipping, smuggling and implementation of measures to streamline and automate government procedures and regulations.

By creating the proper environment and strengthening industries to ensure that they are not disadvantaged by international competitors, the government can promote the success of domestic firms in both the local and international markets that will lead to economic transformation.

Only with the right environment can manufacturing unleash its full potential to take advantage of market opportunities and become an engine for sustained and inclusive growth, job creation and poverty reduction.

(Rafaelita M. Aldaba is vice president and senior research fellow, Philippine Institute for Development Studies.)

1. In world historical terms, elections were most effective and meaningful when they were introduced in the wake of social upheavals and movements to democratize society (see for example, the French and American Revolutions; the US Civil Rights Movement). Such elections did not inaugurate change, they simply followed and extended change that was already under way.

2. The promise of electoral change coming in the wake of (rather than before) these social revolutions could only be realized, ironically, through the medium of a strong state and established bureaucracies left behind by the old order. Refurbished by the new regime, these were the only vehicles capable of carrying out legislative changes on a truly national scale.

3. In the Philippine case, national elections have American colonial origins (whereas local elections date back from the Spanish era). They were first introduced by the Americans in 1907 as part of a series of counter-insurgency measures to quell the Filipino-American war. Hence these elections, like the municipal elections that preceded them in 1903, were not meant to further social revolution but precisely to put an end to its populist energy, re-channeling its demands into a conservative, elite-dominated, counter-revolutionary institution called the Philippine Assembly, the acknowledged grand daddy of the Philippine legislature today.

4. Because of the extremely restrictive franchise under US rule (only English or Spanish-speaking, property-owning males could vote–no more than 14 percent of the population until the 1940s), elections invariably planted the seeds for post-war political dynasties.

5. The American colonial state introduced local and national elections without an adequate civil service and centralized bureaucratic apparatus. Result: the strengthening of the local (i.e., provincial and municipal) basis of elite power brokers amid a weakly centralized state, with the former taking turns at controlling the latter under the watchful eye of the United States. This disparity between local power and national state was further reinforced by a largely agrarian economy dependent, by virtue of free trade agreements, on preferential access to a highly lucrative American market, all of which further contributed to #4 above.

6. The post-world war II widening of the franchise (a condition for full UN membership), coinciding with peasant unrest that escalated into the Huk Rebellion, created turbulent social conditions that would shape the elections of 1946, 1949 and 1953. As with 1907, such elections resulted in domesticating rather than capitalizing on the democratizing possibilities of social movements and rebellions in the interest of re-instituting oligarchic rule under US sponsorship.

7. People Power nullified the results of the snap elections in 1986, clearing away the Marcoses from power, and once
again raised the expectations of significant reforms in the elections of 1987 during the regime of Cory Aquino. And again, as with elections of the past, the results amounted for the most part to the restoration of the old order. The pre-Marcos oligarchy returned in full force, alongside the emergence of new dynasties made up of celebrities, former members of the military, and a bunch of Marcos cronies which in time would include the Marcoses themselves. The momentary opening up of “democratic space” was thus quickly shut down: attempts at land reform fell by the wayside; negotiations with the left abandoned in favor of the vigilante para-military groups (remember the brutal Alsa Masa?) whose attacks on anyone suspected of being on the left made Cory’s administration arguably more violent than Marcos; and the return to a de-centralized state that once more ceded power to local elites.

8. Post-EDSA elections continued to be vehicles for consolidating and enlarging the status quo, not changing it, regardless of whatever good legislation was pursued by truly patriotic members of Congress or admirable policies crafted by idealistic technocrats.

9. Conversely, only the mobilization of popular political participation alongside or outside of elections will tend to spur the democratization of public life. This, in turn, raises the promise of making elections more of a reflection of the popular will rather than a means for reproducing existing inequalities of wealth and power. Example: a broad-based coalition succeeded in pressuring Congress and PNoy to pass the Reproductive Health bill designed to alleviate poverty and empower women. Unless you are a Catholic bishop, you would think it was a great law. But will there be sufficient means to enact and enforce it (presuming of course that the Supreme Court will eventually dismiss pending challenges to it)? Is the state strong enough to course its provisions through the sea of local government units in all their particularity? One could raise the same sort of questions with regard to that other signature reform program of the PNoy administration, Conditional Cash Transfers (CCTs).

10. More broadly, in the absence of any alternatives in the near future, can political dynasties and good governance co-exist? Will politicians be willing to go after their own friends and family members for corruption? Are members of political families capable of standing on principle and merit even if it means supporting non-family members and going against the wishes of their elders, as in recent local elections in the vote-rich provinces of Pangasinan? And what are the chances that even non-dynastic candidates, once they win, can resist the temptation of inaugurating their own dynasty?

11. Is it possible to have a strong state given the geographical divisions and strong local allegiances of voters, and given the sway of money and personalities over political parties and issues? Can we ever overcome the colonial legacy of a decentralized, “weak” state without returning to authoritarian rule? Can the national ever dominate the local, which even under Marcos, proved unfeasible? Or does democratization in the Philippines also mean increasing decentralization and localization of power which are anathema to the building of a strong state capable of reshaping all levels of social life? As we assess the results of 2013 and begin to look towards 2016, these are some questions that may be worth pondering.

Vicente L. Rafael is Professor of History and Southeast Asian Studies at the University of Washington, Seattle. He is the author of several works on the Philippines, including Contracting Colonialism, White Love and Other Events in Filipino History, and The Promise of the Foreign.

I am sad JV Ejercito made it but at the same time I’m happy he is at the tail-end. His brother Jinggoy is sad. Period. On a happier note, I can’t wait for the two Ejercitos to take opposing sides on an issue. JV and Jinggoy trying to show up each other, whoopie! Will JV call Jinggoy Honarable Kuya or will he address him in the manner he deserves?

I think Risa Homtiveros made the fatal mistake of pegging her campaign on Nancy Binay. She should have focused on the other UNA candidates where her record on human rights, anti-corruption, and public service would have stood in stark contrast. But she didn’t. So the only imprint her attack on Nancy Binay left was that of a mestiza picking on a housemaid. I would suggest that she shoot her campaign strategist but hacking the idiot to pieces would be more satisfying.

Grace Poe bested three of the best-disguised trapos in the business. I always thought Grace would be in the top six but becoming number one never crossed my mind. I love it. She was the most underestimated candidate, thought to lack brains and experience and knocked for riding on her father’s name and fame but she proved her mettle during debates and more than held up in penetrating one-on-one interviews. She showed that she is intelligent at the same time sensitive and her moral compass points true North. Give her a little time to settle in and she will become a gem in the Senate.

The election of Cayetano, Binay, Angara, Pimentel, Ejercito indicates that dynasty is a non-issue as far as voters are concerned. I hope the anti-dynasty crowd accepts the will of the voters instead of doubling their efforts to frustrate the will of the voters by lobbying for a law prohibiting people who happen to share the same bloodline from becoming public servants. Besides, Leni Robredo won against a Villafuerte and Aga Muhlach looks like he will beat a Fuentebella. So anti-dynasts please show a little more faith in the wisdom of the common man.

The good showing of Team Patay proves that Team Buhay is dead. There is no Catholic vote if by Catholic vote you mean robots operated by bishops. There is no Iglesia ni Kristo vote either. But that proposition will be difficult to prove because the INC leadership does not announce its endorsement until the last poll of Pulse Asia and Social Weather Station is published. At any rate, the divergent approaches show the difference between the Catholic bishops and the INC bishops. The former do not pay attention to surveys. And that’s ironic because surveys tune in on the voice of the people, which is supposedly the voice of God. Then again if those bishops listened to the voice of God to begin with, they would not meddle in secular politics.

The biggest losers are Enrile, Estrada, and Binay. UNA came in last. That shows they have no endorsement power if the candidate does not carry their surname and in the case of Enrile, he couldn’t even carry his own son. The good news is we are all winners. If I have to explain to you why we are all winners, then you are among the losers who believed that there was more to UNA than Enrile, Estrada, and Binay.

Buencamino is a fellow of Action for Economic Reforms.

But I am likewise a believer in collective action. Putting aside people power revolution, which is rare and hard to mount, the best form of collective action to effect change is the ballot.

The Iglesia ni Kristo (INK) or the National Democratic Front (NDF) by itself is not a kingmaker, but how it harnesses collective action leads candidates to seek its support. Well, one need not belong to an organization to spur collective action. Kris Aquino has the ability to cast her magic spell; so does Judy Ann Santos. I wonder why Jamby Madrigal did not get Judy Ann’s endorsement.

For neither do I have the INK’s or NDF’s power to command nor Kris’s magnetism, my intent is modest: to systemize my thoughts through writing and convince my wife, my mom, and my best friend about my vote. That’s still a way of doing collective action.

Consider that the 2013 elections have been framed as a referendum on the performance of the PNoy administration and the continuation of reforms. Indeed we need to support those candidates who have taken part in the formulation or legislation of reforms.

The reforms have to be consolidated. Vested interests are motivated to reverse the reforms. Think of the tobacco industry, which will attempt to amend the sin tax law.

Furthermore, more reforms cry out to be done. Take fiscal and tax measures. Despite the passage of the sin tax (the threat of reversal remains), and the heroic efforts in tax administration, the required level of tax effort is of great magnitude. Amid high growth, public financing is growing, especially for infrastructure and for areas with market failure. Government has to source revenues over and above the incremental amount from the newly legislated sin taxes.

The next Congress thus not only has to defend the reform recently passed. It must likewise pass new tax measures. Vested interests will oppose proposals to increase mineral taxation and rationalize fiscal incentives.

The administration must likewise consider increasing the petroleum tax, no matter how politically controversial it is, if only to correct the decline in the real value of the specific tax from gasoline.

Increasing the petroleum tax is an effective way to address the short-term and long-term problems of urban traffic. In the short term, a considerable increase in gas prices will reduce the volume of vehicles on the main roads during peak hours. In the long term, the additional revenues from the tax increase can be used to improve the public transportation system.

The point is, using tax policy as an illustration, we need to elect senators who will be consistent in pushing for hard reforms and bold in resisting vested interests and misguided populism.

How candidates stood on the sin tax or how they voted on this issue is a good proxy of how reliable they are as reformers. The sin tax is not a single issue. It in fact embodies the essence of the reforms that the country needs at this stage of our history.

The sin tax is a health reform. The basic characteristics of the sin tax, including the high tax rates and the unitary taxation for tobacco products, will reduce consumption by almost half. In addition, the incremental revenues from the tax will finance universal health care.

The sin tax is an economic reform. It boosts government’s revenue effort at the same time that it expresses the seriousness of government in pursuing difficult economic reforms. This has led to a hard-earned investment upgrade, which ironically in the short term will attract hot money.

The sin tax is a reform for good governance and institutions. The victory of the sin tax law is a defeat of historically powerful particularistic interests. These are vested interests associated with rent seeking and pulling strings in the Executive, the Congress and the judiciary.

The PNoy administration deserves to be commended for having such reform passed. But here’s the catch: Not all the candidates of Team PNoy are reliable, based on their behavior on the sin tax. One candidate, Chiz Escudero, even opposed the sin tax bill. Two other candidates, Alan Peter Cayetano and Loren Legarda absented themselves in the vote to ratify the bicameral conference bill, which won by a margin of only one vote. They must give a convincing explanation for their disappearance during the most crucial vote.

It is ironic that the leading candidates of Team PNoy are the unreliable ones but those who are struggling to win, namely Jun Magsaysay, Risa Hontiveros, and Jamby Madrigal are the proven reformers.

One candidate from Team PNoy, who is in the winning column, deserves citation: Koko Pimentel. A generous campaign supporter asked Koko not to show up for the ratification vote. Koko showed up for the vote that really mattered. As a result, he lost some wherewithal for the election campaign, but he has kept his integrity and has enhanced his reputation as a clean politician.

Although I remain suspicious of some Team PNoy candidates, I have nothing good to say about UNA. It is a party of the ancient regime—those loyal to Estrada and Gloria Arroyo.

And it is a party whose leaders like Juan Ponce Enrile have obstructed the great reforms like the sin tax. UNA candidate Gringo Honasan voted with his godfather Enrile in rejecting the sin tax reform. Other candidates like Jackie Enrile and Migz Zubiri also oppose the sin tax and if elected, will attempt to amend or reverse it.

We cannot allow UNA to disrupt the momentum of reforms. We must elect a core of reformers who will defend the gains and fight for big reforms beyond the term of PNoy.

Let’s start with clerical endorsements, Team Buhay and the self-proclaimed pro-life Catholic vote movement. What do they want?

They want legislators who will oppose laws that do not strictly adhere to the teachings of the Catholic Church. They want a Congress that takes dictation from bishops who get their cues and orders from the Vatican. They want a republic where the CBCP (Catholic Bishops Conference of the Philippines) exercises veto power over laws and policies not aligned with Catholic doctrine.

Now here you are, a senatorial candidate who also opposes the RH (Reproductive Health) Law but not necessarily on the same doctrinal grounds as the so-called pro-lifers. You are against the RH law for a number of other reasons—maybe you believe the money for RH should be spent elsewhere or maybe you believe artificial contraceptives are unhealthy. Whatever. But your name has been included in the pro-life senatorial ticket and you are now identified with those who believe that what belongs to Caesar belongs to the Vatican. How will you fare with the overwhelming number of voters who believe otherwise? You could lose their vote. The bishops endorsed you and that marked you as a candidate obedient to their wishes. Some endorsements can do more harm than good.

Let’s go to secular endorsements. An endorsement from a politician with command votes is good but it can also be a liability. For example, Romeo Jalosjos is backing UNA in Zamboanga, his bailiwick. Will his endorsement help UNA with a national audience that only knows Jalosjos as the convicted child-rapist and pedophile that Gloria Arroyo pardoned? Jalosjos is not the only sketchy trapo supporting UNA. There are a dizzying number of them, all working for an overwhelming UNA victory. Why are trapos pinning their hopes on UNA?

In fairness to UNA, they claim they are also for Daang Matuwid. But the problem remains, there are too many crooked trapos endorsing them. UNA is the Trapos’ Choice. Some endorsements can do more harm than good.

Buencamino is a fellow of Action for Economic Reforms (www.aer.ph).

The Bulletin’s 27 April 2013 edition has a well-written inside-page story written by Genalyn Kabiling titled “PNoy Seeks Reform Allies, Assistance.”

I like the writing style, which grabs the reader’s attention. Take the lead sentence: “He is not a superhero; he is human and needs all the help he can get.”

The non-superhero is PNoy. Indeed, PNoy cannot be compared to Iron Man although he and Tony Stark share the same traits of being drawn to attractive women and being moved to fight evil.

Good writing and a good story are anchored on the subject. The writer quotes PNoy lengthily:

“Hindi naman tayo superhero, at kahit kayod marino, wala [nang] tulog, wala pang kain at wala na rin bakasyon maski ano po ang gawin kung nag-iisa kukulangin ang lakas ko upang tugunan ang lahat ng minana nating problema, pati na ang dumarating pang mga pagsubok.”

And spicing his comment with humor, PNoy says: “Pakiusap ko lang ho huwag naman ninyo ipapasan sa akin mag-isa, at baka naman ho dumating ang panahon magkita tayo hindi na ninyo ako makilala dahil baka pareho na kami ni Bembol Roco. Idolo ko po iyon sa acting pero hindi sa hairstyle.”

Thus, PNoy asks the electorate to vote the Team PNoy candidates. PNoy needs more allies to advance and speed up the reforms for daang matuwid. The observation is that the second half of the administration is a difficult period for the Executive to have Congress pass controversial but necessary legislative reforms. The politicians in Congress tend to dismiss the presidency as already lame duck (a consequence of a weak party system and the prohibition of a second-term presidency). An antidote is to have an expanded and solid group of allies in Congress.

The surveys indicate that Team PNoy will win decisively. That’s good news. But here’s the rub: We are not sure that some of the winners from Team PNoy will become reliable allies for reforms.

The case of the passage of the sin tax law illustrates the predicament that PNoy faces. The sin tax is a good example of a hard reform that has long-term impact on the economy and on institutions. It can thus be a proxy of how politicians will behave when faced with a similar reform in the next Congress.

The Senate was able to ratify the bicameral conference bill on the sin tax, but only by eking out a one-vote majority. The sin tax reform was nearly lost because several senators who are considered PNoy’s allies did not show up for the vote or worse, opposed the bill.

Senators Alan Peter Cayetano and Loren Legarda (Team PNoy candidates who will surely win), Manuel Villar (the husband of Team PNoy candidate Cynthia Villar, who will likewise win) and TG Guingona (a Liberal Party stalwart) were absent during the crucial vote. And Senator Francis Escudero (another popular Team PNoy candidate) voted against the bill.

At the same time, the anti-reformers (again, using the sin tax as a representation) like Gringo Honasan and the son of Juan Ponce Enrile are threatening to barge into the winning column.

In short, PNoy’s fear that his “hair style” will completely become a Bembol Roco is real. To prevent that from happening, the voters must reject the likes of Honasan, Enrile, and Zubiri, and vote the most reliable reformers in Team PNoy. Further, the candidates belonging to Team PNoy who have a spotty record must show a pre-commitment that should literally tie them to PNoy’s reform agenda.

In Greek mythology, Ulysses made a pre-commitment by asking his crew to fill their ears with wax to make them deaf and bind him to the ship’s mast once they reached the land of the beautiful sirens. If not for this pre-commitment, Ulysses and company would have succumbed to the sirens’ naked beauty and alluring voices, but leading them to their decay and death.

Among criminals, having a tattoo of Sige-Sige or Oxo is a pre-commitment that they will stay forever with the gang.

PNoy can make a reasonable request to his former “crush,” Loren Legarda, to allow her foot to be chained in the Senate session hall whenever a crucial vote occurs, thus preventing a disappearing act. PNoy can also ask his friend Chiz to have one of his cheeks tattooed, with the lettering: “I luv Heart and PNoy.”

What is worrisome is that the most reliable allies of PNoy are trailing. They are Jun Magsaysay, Risa Hontiveros, and Jamby Madrigal.

Not only is Jun Magsaysay the real Magsaysay (not Mitos who is merely married to a Magsaysay and not necessarily a good Magsaysay) but more importantly, he has a solid track record as a politician in championing economic and political reforms. He is a friend of the farmers, a champion of agriculture. He was the key in exposing and condemning the fertilizer scam during the Gloria Arroyo regime.

Risa Hontiveros is the most progressive among the candidates. Her presence in the Senate will threaten its trapo culture.

And even though some might ridicule Jamby Madrigal as another Miriam Santiago, the fact is PNoy needs another Miriam Santiago type of politician who will be resolute and outspoken in fighting for the hard bills. And let it be known that Jamby, despite being a Madrigal is as left wing as Risa. She takes pride in having the DNA of her lolo, Pedro Abad Santos, the founder of the Philippine Socialist Party.

And so, if we want to help PNoy save his hairline, let us get a pre-commitment from some of his not-so-reliable candidates, vote for the consistent ones who are trailing, and reject the incorrigibles like Honasan, Enrile, and Zubiri.

A significant victory of the campaign was the way the issues were communicated. Ordinary people gained access to a rather complex issue that can be easily manipulated by various interest groups. Few expected that the proponents of the new law would get across the maze of media handlers in the pockets of Big Tobacco and Liquor. Reading the broadsheets gave you an idea of who these defenders were. Some of them continue to feed drivel to newspaper readers to this day. Some continue to write hundreds of column inches on the topic—haranguing the harbingers of change to reverse a hard-fought victory.

Among civil society groups, the Action for Economic Reforms (AER) played a leading and critical role in generating the research, laying down the facts, and amplifying these in clear layman’s language. AER got support from the mainstream media, organized special events, and got the youth involved in the campaign—especially in social media. That the campaign was able to mobilize the youth—a leading consumer of cigarettes and tobacco in the Philippines— is a testament to the organizing skills of AER.

The campaign proved that language determines access and understanding. One of the steadfast proponents of change was UP Professor Solita Monsod. Her columns in the Philippine Daily Inquirer and Business World displayed the sort of intellectual honesty and analytical rigor required to win the fight. The arguments she posed were simple yet formidable that even non-economists could relate to them. She neatly deconstructed the public welfare argument and enabled many readers to access the real rationale behind the reforms.

The campaign demonstrated the need for solid policy research and technical support work, addressing the key issues like the health impact, actual and potential revenue estimates, direct and technical smuggling, including the welfare of tobacco farmers and workers. AER had a full-time contingent of experts working on the issue at the height of the campaign, and a resource persons bureau that were called upon to fight mano-a-mano on the issue in any platform—print, broadcast, and television.

A crucial ingredient was the mobilization of public and private health professionals and practitioners on an issue that AER promoted as a health issue first and foremost. Doctors and nurses played the most critical role of framing the language and discourse buttressing the campaign’s health advocacy position and provided the solid evidence base that Big Tobacco and Liquor and its media handlers could not buck.

The campaign proved that name-and-shame tactics were useful at certain conjunctures. This meant exposing the lies and half-truths peddled by defenders of the status quo, and naming them if necessary. This was critical given the stonewalling by certain legislators and the bizarre turn-around by some of the bill’s supposed sponsors.

The struggle to reform sin taxes had unintended knock-on effects. Key legislators were removed or resigned from the leadership of the powerful ways and means committees in the House and Senate. A particular proposal was shorn of appearances and dubbed as a Philip Morris Bill. At the other end, continued media attacks against the sin tax law have targeted companies who supported the bill and agreed to follow the law—including one multinational tobacco company that agreed to the reforms and by doing so is seen to have betrayed the tobacco industry. The vicious attacks against those who supported the sin tax law are a veritable case study in media bullying and a particularly graphic one.

Indeed, AER has solved a collection action problem that has bedeviled different reformers and activists within civil society, the government, the church, and business. Heat from above and heat from below combined to make the measure a priority bill—with the full backing of the President and leading members of Congress. AER forged a broad tactical alliance that included youth and students, peasants and workers, priests and nuns, artists and entertainers, bureaucrats and civil servants, politicians, and finally smokers and non-smokers. The public health dimension was never compromised. However, the scope and pace of reform was developed to march in step with the capabilities of various actors to monitor, regulate, and develop alternatives for those directly affected by the reforms.

In the end the sin tax bill delivered what AER calls the magnificent seven (7) victories of the campaign. A win for the poor, a win for the youth, a win for health, a win for the economy, a win for tobacco farmers, a win for politicians and governance, and a win for the future.

No columnist or commentator can ever take that away.

Dr. Lara is a research fellow of the London School of Economics Crisis States Research Network. This paper is an excerpt from his studies of successful communication strategies.

One school representative to the UAAP board said, “This is to protect the school that made efforts in recruitment… to protect the time spent on the athlete and to keep them in their alma mater.” Another reasoned similarly, “The new residency rule is to protect the league because we can’t allow other schools to pirate the best available homegrown players…We took everything into consideration and we’re not depriving anyone of their rights.”

Say what?

There are no guaranteed investments on this planet. An investment is always a gamble. There is no certainty that the recruited athlete will become a star even with all the coaching, training, financial and moral support from the school’s sports department, there is no assurance that the athlete will not suffer a career-ending injury in the course of playing for the school, there is no telling whether or not the athlete will lose interest in sports. Recruiting, training, and coaching an athlete is a gamble. No one pointed a gun at the school to force it to recruit a particular athlete. And so it must live with the risk of losing an athlete for one reason or another, especially to a more attractive team or school.

A UAAP-imposed residency requirement is a penalty on the athlete who chooses to transfer to another school. A school-imposed residency requirement is not a penalty, it provides a necessary period of adjustment to the transferee. I can still recall basketball games where some transferees were subjected to merciless booing and cries of traidor from their old alma mater every time they held the ball.

If a school wants to keep an athlete then it better make itself so attractive that its best athletes will never want to play for another school. Debt bondage is not the way to do it. Indenture is a practice that is totally unacceptable in a free and competitive society.

Why do I call the residency rule imposed by the UAAP a form of debt bondage?

The Princeton University website defines debt bondage as “an arrangement whereby a person is forced to pay off a loan with direct labor in place of currency, over an agreed or obscure period of time. When a debtor is tricked or trapped into working for very little or no pay, or when the value of their work is significantly greater than the original sum of money borrowed, some consider the arrangement to be a form of unfree labor or debt slavery.”

The “investment” the school made is the “loan” the athlete must pay off through direct labor i.e. playing for the school team. The period of time for working off the “debt” is open-ended because it is the school alone, through the UAAP, that decides when the debt is fully paid. The athlete may not have been tricked into signing on but with the new UAAP ruling he is now trapped by the school that originally recruited him. And look at what a Keifer Ravena may have “borrowed” from his school compared to the payback that the school got from him.

Let’s say the athlete was recruited to play for the high school team. Why does the athlete’s obligation extend to playing for the school’s varsity team? Why does the debt extend even beyond the school year that the athlete played, was the year’s debt not paid with direct labor? Do schools have the right to tell their athletes you will keep playing for us until we decide that our investment in you is fully paid? Read again the arguments of the UAAP board, tell me that their residency rule is not just another form of indenture, and I’ll lend you some money in exchange for your labor.

The UAAP’s new rule is meant to protect the investment of its member schools. Period. It has no interest in the welfare of the student athlete, in fact it punishes the exercise of the right to choose where to pursue higher education.

The UAAP would be wise to withdraw its residency rule before government steps in and does it for them. As Sen Pia Cayetano told the UAAP, “Sorry, but when rights are affected, [government] can step in to protect its citizens.” As it should.

The UAAP also claims the new rule is meant to maintain competitiveness. How can the practice of having indentured athletes maintain competitiveness? More importantly, why is the UAAP placing the burden of keeping the league competitive only on the players? Is it the athlete’s fault if one school is more attractive than another? The burden of keeping the league competitive is on the UAAP board of trustees, they shouldn’t earn their keep on the backs of student athletes.

The UAAP may have forgotten that the U in UAAP stands for universities. Likewise some universities may have forgotten that they are educational institutions to begin with and excellence in sports is only a part of their mission. Yes, trophies bring money that can be used for the improvement of the school in terms of teachers and facilities but sports departments are not ends in themselves. Education is the end that trophies serve and not the other way around. The sports department of schools, through the UAAP, cannot be allowed to dictate where student athletes go for their education.

Buencamino is a fellow of Action for Economic Reforms. (www.aer.ph).

We commend Finance Secretary Cesar Purisima for his recent statement delivered at an Asian Development Bank (ADB) forum, which expresses the oneness of government policy on managing capital flows. He said that the national government intends “to borrow almost a hundred percent of (its) borrowing from the local market.”

The preference for domestic borrowing will help meet the objective of stemming the appreciation of the Philippine peso, which is hurting industry; agriculture; services, especially business processing, and the families of overseas Filipino workers (OFWs).

And as Secretary Purisima said, focusing on domestic borrowing instead of foreign borrowing, even as government has steadily increased tax effort through major reforms like the sin tax law, contributes to the development of the local capital market.

Secretary Purisima’s pronouncement is significant on at least three counts:

First, it shows the firm cooperation and coordination between the national government and the independent BSP on managing foreign capital flows and correspondingly, the exchange rate.

Second, it signals to investors that the Philippine policymakers lean towards having a competitive exchange rate and that government is assertive in preventing the peso from getting grossly overvalued.

Third, the Purisima statement and the BSP measures prepare the government to tackle the immediate effects of the investment-grade credit rating from Fitch, which will undoubtedly attract portfolio flows.

The national government position, as articulated by Secretary Purisima, complements the measures that the BSP has undertaken, including the sterilization of capital inflow through heavy purchasing of foreign currency, the easing of monetary policy, the pre-payment of foreign debt, the liberalization of capital outflow, the restriction of foreign access to special deposit accounts (SDA), and the continued slashing of SDA interest rates.

To be sure, stemming the appreciation of the peso is a difficult task. This is in light of the huge remittances from OFWs and the surge of short-term flows as portfolio investments in crisis-stricken Europe and the United States move out and seek better returns in attractive emerging economies like the Philippines. Further, the investment grade that the Philippines earned, which is an indicator of investor confidence, has an ironic effect of attracting more portfolio investments. Meantime, the longer-term players await the resolution of major binding constraints.

Arguably, bolder initiatives and new instruments have to be deployed to curb the appreciation.

It is against this background that the consensus in government—taking together the statements and actions of the BSP and DOF—gives us hope and confidence that we will be able to overcome the binding constraint relating to the exchange rate. We are one with government in tackling and resolving this problem.

The authors, from the Ateneo de Manila University Economics Department and Action for Economic Reforms, comprise the initial set of signatories of the statement above. Other signatories being gathered include businessmen, overseas Filipino workers, and other academics.

At any rate, what were once considered empty threats are now being taken seriously by US Defense Secretary Chuck Hagel. He announced the deployment of a missile defense system in Guam, “They have nuclear capacity now, they have missile delivery capacity now. We take those threats seriously, we have to take those threats seriously.”

The question now is how to get North Korea off its war footing. In order to do that one must first go beyond the caricature of Kim Jong-un as the crazy boy dictator of a hermit kingdom.

The Atlantic, an American weekly that has maintained its intellectual integrity and credibility for over a hundred years, enumerated five myths about North Korea, myths that get in the way of understanding what makes North Korea “tick”, myths that can lead to simplified analysis and its sorry consequences.

What are those myths?

First, the young Kim and his team are crazy. He is not. They are not. Kim’s response to the new sanctions imposed on his country following its latest weapons tests plus the US-Sokor war games is the logical reaction of any leader whose country’s peace with a neighboring country is held together only by an armistice, not a peace treaty. Furthermore, North Korea is surrounded by allies of South Korea, what is Kim supposed to say or do about what’s happening? He can surrender or defend his country, what would a rational leader do?

Two, North Korea is a failed state. It is not.

The Atlantic, “It came close to being a failed state during the 1990s because of mass starvation. But Pyongyang weathered that storm…The economy has stabilized and even improved. Despite sanctions, trade has expanded significantly, not just with China but also with South and Southeast Asia, Africa, and Europe to the point where the North may have even enjoyed a current account surplus in 2011.”

North Korea, the Atlantic adds, is not comparable to developed countries but “it fits in if compared to developing countries in Asia, Africa and Latin America.” (See also CIA World Factbook to see North Korea’s ranking compared to other states.)

Three, North Korea is a hermit kingdom. It is not. It may not have much to do with the US but it engages not only illicit arms trades with other countries, it also has legitimate business transactions with the rest of the world.

The Atlantic, “Did you know that North Korea sends hundreds of students overseas for educational and business training? Thousands of North Koreans work in China, in Mongolia where they produce goods for popular British clothing brands, in Kuwait where they work on construction projects, and in Russia where they labor in logging camps. A North Korean construction company is currently completing a museum near Cambodia’s famed Angkor temples featuring computer-generated simulations of the ancient monuments. Inside North Korea, just to give a few examples, the information technology sector is an outsourcing destination for other countries, even developing software and apps for the iPhone. Pyongyang’s sophisticated cartoon industry is reported to have been involved in the production of “The Lion King.” The German Kempinski group has been hired to operate Pyongyang’s largest hotel expected to open this spring. And residents and visitors to Pyongyang can now find Viennese coffee at the appropriately named “Viennese Coffee Restaurant.” Of course, North Korea is not an integral part of the international community, but neither is it a “hermit kingdom.””

Four, North Korea cheats on agreements. The short answer is “yes and no.” It cheats when it can. That’s pretty much what every other country guided by national interest would do.

Finally, there’s the myth that China is North Korea’s puppet master. It is not.

The Atlantic, “There are important limits on what China can and cannot do. Having influence is one thing, being the North’s puppet-master another. Hundreds of years of bad history between Korea and China, plus decades of dealing with a giant communist neighbor have taught the North how to manipulate China. Moreover, Beijing may be unhappy with the North’s bad behavior. But it cannot just throw Pyongyang to the American and South Korean wolves since maintaining quiet, stable borders to facilitate its own economic development is a critical priority.”

A realistic appraisal of Kim Jong-un is the first step towards a peaceful outcome to the impassé. Kim is not a cartoon character. He is a real person who has nuclear weapons at his disposal. A nuclear exchange between North Korea and the US could lead to a bigger war. An errant missile could be interpreted by another country as aggression. Who knows who else will join the fray for whatever reason once nuclear missiles start flying?

Buencamino is a fellow of Action for Economic Reforms (www.aer.ph).