Speech to Graduate Students Of UST

March 11, 2011

Environment and National Industrialization

Dear Friends, good afternoon!

The National Economic Protectionism Association or NEPA salutes the University of Santo Tomas on the occasion of its 400 years anniversary.

Though NEPA is the country’s oldest organization of businessmen with its 76 years of existence, it pales in comparison with your own 400 hundred years. Yet we take pride in the knowledge that we share some similarities in the great movement in nation building.

From history we know that the first student mass action in the country occurred in UST preceding by more than a decade the Great Propaganda Movement. Great men from the propaganda movement like Marcelo Del Pilar to the founders of Katipunan like Emilio Jacinto and Pio Del Pilar and the First Philippine Republic  came from the UST.  Throughout time, great men and women passed the great halls of UST to make their indelible mark in our history.

NEPA, too, have its bit of history. NEPA was founded at a time when our country was under direct rule by the Americans. Filipino businessmen at that time were under constant threat of going bankrupt due to competition from imported goods.

In conjuction with the independence movement led by Quezon and Osmena, the young entrepreneurs among them the forefathers of today’s Sorianos, Razons, Periquets, Tuasons and Aranetas founded NEPA to spearhead the movement for economic independence.

To the then founders and leaders of NEPA, the issue and the answer is simple. It is as NEPA 1934 constitution states we should one, organize and campaign for greater consumption of locally-made products and keep alive the doctrine of national economic protectionism; two, propose and support legislation promoting new and existing local industries and enhancing domestic and foreign trade; and three, protect our economic interests against unfair and unjustified foreign competition.”

In short, we should build our own national economy!

Today’s topic is not only current but pressing.

During the past few years, major weather disturbances damaged food production worldwide. Fuel prices had been steadily rising way before the current Mideast crisis.

What does this mean for us?

For one, the Mideast crisis will result into higher oil prices in the short term. More importantly, we can expect dramatic shrinkage for the country’s top export – the Filipino OFW’s. Our fiscal and financial position, already precarious, will totter.

Two, the United Nations is predicting skyrocketing food prices later this year. The Philippines is 13^th on the list of the most vulnerable countries that will suffer the most. It does not take a rocket scientist to know why and how.

Due to failed promises to upgrade agriculture and ensure the country’s food security, our country is dependent on food imports to feed our people. More than half of our arable lands are devoted to export production with 2 million hectares devoted to coconut, a million hectares to sugar, and another million hectares devoted to bananas and pineapples. The five million hectares devoted to rice and corn had been sharply decreased by conversion to subdivisions and commercial establishments.

We expect that the poorest amongst us will continue to more hunger as food and fuel prices increase.

My friends, the crisis that we find ourselves into is one of our own making. Since the mid-60’s, trade liberalization or what is now fashionably called globalization have wreaked havoc to our manufacturing and industrial base.

Economist historians emphasized the fact that during the 50’s the country was second only to Japan in the whole of Asia. What is important in this knowledge is that we were second in development because we built during the 50’s a large manufacturing and industrial base. We were producing steel, jeeps, textile, plastics for our people. Sadly, this was swept away during the mid sixties by the new mantra called trade liberalization and globalization.

And so, with a weak manufacturing and industrial base, our economy cannot absorb a growing labor force and population. Hence, to offset the internal crisis, we were forced to export our countrymen to all parts of the globe – heralding an economic diaspora.

What is now left of our manufacturing and industrial base is directed primarily for export. Hence, an economy dependent and vulnerable to crisis after crisis.

And so, what can we do?

We can continue to pursue the five decades long export strategy. Or we build our own national economy – that is producing for our people, our wants and our needs.

Is it not too late not a few have asked?

NEPA believes it is never too late. South Korea was a backwater country during the time we were number two in the whole Asia. During the 70’s, despite World Bank and IMF warnings, (the same warnings we were received), South Korea pursued an industrialization plan anchored in a comprehensive steel industry. Today, South Korea is number four in the region, next only to China, Japan and India.

On the other hand, our current development path is based on exports and recently, to an expanded effort to open up mining to foreign investors. This brings us nearer to our topic today – environment and climate change.

Much ado have been made of exploitation of our natural resources by foreign interests. But then a simple look of our history shows differently.

During the 1940’s up to the 1970’s, the Philippines was one of the world’s top producer of copper, gold and other mineral products. We have had Atlas Mining, Benguet Mines, Lepanto Mines, Marcopper, and Paracale. Unfortunately, mining did not lead us to development but a wasted environment.

Opening up our mining resources will ultimately lead to what some economists call the Africanization of the Philippines. As you well know, Africa had been mined for centuries by foreign powers. All it got for its wealth is extreme poverty and AIDS.

We are against opening up our mineral resource to foreign interests but we are for the development of our mining resources to build our own industrial and manufacturing base.

NEPA believes that we can and should partner ourselves with foreign investors in the development of our natural resources IF the development of which is directly supportive of a comprehensive national industrialization plan. Extracting nickel, iron, gold, copper and other minerals to build other countries industries to the detriment of our own is self-defeating.

NEPA believes in the protection of our natural resources and our environment for and in behalf of the Filipinos.

We cannot ignore the degradation of our environment and the global climate. Even in a pure business sense, we can only ignore them at our own peril.

We must be cautious of various environmental advocacies that imperil our own national aspirations of development and environmental standards that promote and protect foreign interests.

We are against coal fired plants in the country not only because environmental concerns.  More importantly, coal plants are providing for the power requirements of largely foreign businesses in export processing zones.

We are for clean energy such as solar and hydrothermal and other environment friendly energy sources.  But we hope that the government can assist in making these cost efficient for the Filipino industrialists and manufacturers.

We are for the protection of our forests because during the past century big logging concessions have laid to waste our forest in order to export them!  We must judiciously use and conserve our forests along the lines of the needs of people.

My friends, God has blessed our land with bountiful resources, a climate that allows us to till our land the whole year round, and more importantly, a people capable of realizing the dream of development.

Unfortunately, our environment have been damaged and our natural resources have been spent not to advance our national aspirations. Our rivers that used to irrigate our farms have dried out, our forests are denuded due to mining and large-scale logging, our marine resources are under constant threat.

Like yourselves, NEPA believes we can and must turn this around.

NEPA advocates a fine-tuning of our environmental advocacies and policies to align with the goal of national industrialization and development and against the use of our natural resources and degradation of our environment to the benefit of foreign interests.

NEPA unites with the Filipino businessmen in the effort to build a self-sustaining use of our natural resources in order to build and rebuild an environment worthy of our children.

Mabuhay ang UST!

Mabuhay ang Sambayanang Pilipino!

Thank you.

Ibon Foundation Roundtable Conference

Speech

Sa ngalan ng National Economic Protectionism Association, magandang umaga sa inyong lahat!

Lubhang napapanahon ang roundtable conference na ito na ipinatawag ng Ibon Foundation sa okasyon ng G8 at G20 summit sa Canada. Mabuti na lamang at roundtable conference ang ating inilulunsad ngayon di tulad nang nangyaring riots sa pagitan ng Toronto police at ng black shirts protesters na tumututol sa papatinding pandaigdigang krisis sa ekonomya at pinansya. Ang naganap na mga kaguluhan sa halos lahat ng pulong ng WTO, GATT at iba pang multi-lateral conferences kaugnay ng pandaigdigang ekonomya ay senyales lamang ng nagaganap at nagbabadyang krisis sa buong bahagi ng daigdig kasama na ang ating bansa.

Malinaw ang mga katanungang inihapag ng IBON sa pulong natin ngayon. Subalit tulad ng maraming tanong, mahirap, kumplikado ang mga sagot.  Pagpasensyahan nyo na ang aming munting ambag.

Has there been or rather is there recovery from the worldwide financial and economic crisis? If the events in Greece, and earlier in Iceland, is any indication, we believe that is no recovery as of yet.

The worldwide crises and attempts to mitigate and control the financial turmoil triggered by the US sub-prime and mortgage debt problems created and multiplied the crisis exponentially. That much is clear.

From a purely domestic and US problem of greed in profit making, the world reaped a recession none had ever seen before. The US-led stimulus or pump priming effort increased the public debts of governments worldwide not unlike the mythical Hydra – the more you cut off the heads more threats and problems you have.

And so, the much ballyhooed $4 trillion stimulus package the US had been bandying about, more if we count the European counterpart stimulus package, created a new monster in the form of massive sovereign debt. Greece is only just the beginning.

Already, developed countries are in a  quandary – will it pursue the US-initiative of pump priming their economy or be more prudent in the form of austerity measures – the same measures EU imposed on Greece in exchange for 300 billion euros? This is the problem the G8 and G20 summit are trying to accomplice.

What ever their solutions are, one thing is clear, it would be in the interest of their respective economies. The Philippines need to think the same. What would be in our interests?

The worldwide recession impacted on the Philippine economy almost immediately. The electronic manufacturing sector, along with several other industries lost tens of thousands of jobs. Labor export contracted across the board. The cost of imports primarily that of petroleum increased triggered in part by increased demand and a falling peso-dollar exchange rate. The list is long. But again, this is the price we are paying for a globalized economy.

The Philippine response had been typical. Follow the US lead. And so the government initiated its own version of a stimulus package. But lacking the manufacturing and industrial base and strong domestic market with which to maximize any pump priming activity, our version of pump priming had been lost in haze corruption estimated in the billions of pesos annually.

The result of our half-hearted and misdirected stimulus spending is massive public debt and a P300 budgetary deficit. The Philippines debt problem had long been in life support, surviving primarily on the billions of dollar annual remittances of our overseas contract workers. Without these, its common knowledge that our finances and economy had long ago went belly up.

Should we follow the austerity route? Sad to say, the Philippines had been there, done that to no effect. The austerity measures initiated by President Marcos during the early 80’s and especially following the Aquino assassination only led to the EDSA revolution. Not all economic effects of an economic measure can be found in the accounting books. Same with Greece, and before that Argentina. Austerity measures generally means that the poor should have less while the capitalists, the big banks, and the big corporations who all contributed heavily in the financial and economic crisis are the ones that get bailed out!

And so, I believe that whatever the consensus in the G8 and G20 summit in Canada are – be it a continuation of the stimulus route or the austerity measures, the implications for the Philippines will be the same. We would still be in an economic and financial free fall. The stimulus package or austerity measures will arguably prioritize putting to work citizens of developed countries to the detriment of migrant labor. Austerity measures will reduce to a trickle investments in the Middle East already feeling the crunch of real estate bubble. Any which way, Filipino migrant workers, already a tenth  of our population faces uncertain future abroad, and a bleaker future once they return to our country.

The reasons are clear – we lack the manufacturing and industrial base that can immediately absorb a burgeoning labor force. My friends, sex education is not the answer though we get shafted a lot these days.

President-elect Noynoy Aquino economic program is not comforting to say the least. Based on his speech to the Makati Business Club last February, his economic platform is grounded on one: anti-corruption efforts designed to eliminate a P280 billion waste in government budget annually; two, focus on what the American Chamber of commerce are rooting for the Big Seven – agriculture, business process outsourcing, creative industries, infrastructure, manufacturing, logistics, mining and tourism and thirdly, fiscal reforms grounded on a no-new taxes promise.

On its own, the anti-corruption platform will not immediately translate to the reduction of the budget deficit as corruption is deeply ingrained in almost all economic and governmental activities. For one, it will probably slow down flagship projects and government bidding and procurement procedures. Secondly, going after plunderers and big-time grafters will most probably get bogged down in the judiciary system. And if the Marcos and the PCGG experience is any guide, it will take decades before any verdict is handed down, and not necessarily to the interests of justice for the people.

The no-new-taxes policy is at best misguided or just plain political propaganda. The Aquino administration is looking at a more than P300 billion deficit and a P600 billion yearly debt amortization and increasing. Simply removing the estimated P280 billion losses to corruption and plugging it to the fiscal deficit in a year or so will not cut it in the real world.

What is more worrisome is the growth focus of the current administration. It appears that the Aquino government had copied verbatim the economic agenda of  foreign chambers of commerce and the US chamber of commerce in the Philippines. If adopted by the Aquino administration, the government will only be replicating the economic pattern started by his predecessor with the same or worse results.

The Big Seven cannot generate the number of jobs required to mitigate the worst of the world wide economic recession.

The BPO industry is plateauing, due in part to the slowdown of business activity in the US. What remains in the BPO industry are generally credit card collection efforts and customer service of American banks and credit card companies.

The mining industry as evidenced by the practice of the Arroyo administration are generally the issuance of exploratory permits and what little practical real-world mining existed is bogged down by serious environmental concerns.

The manufacturing sector, mainly the electronics and car parts manufacturing sector are all dependent to the US market. And we all know how the US car industry is in the US and in Europe today. The Big Three in Detroit is bankrupt, and the computer and electronics industry is in a state of overproduction. The food and beverage industry offer a bit of hope it can only grow so much before the saturation point is reached as the purchasing power of the Filipinos is constricted by loss of jobs and decreasing remittances.

Agriculture, what the US and the Arroyo meant was new high-value crops such as jethropa and industrial cassava are encountering and will encounter serious social challenges as these require vast amount of land already occupied by farmers.

Tourism? What can I say? It is hard to imagine Americans or Europeans doing much traveling to the Philippines these days except maybe for the Koreans.

Infrastructure? That is promising on paper but the Aquino administration had to show in detail what infrastructure project to prioritize and more importantly,  how it will be funded.

We hate to be a wet blanket for the Aquino administration but these are serious concerns.

As to solutions, NEPA had for the past 75 years had been a voice in the wilderness. But the voice of economic nationalism had been proven right during the only period when the country experienced high economic growth – that is during the 50’s.

Why the country then practiced economic protectionism – whether sanctioned by the US as it was focused in rebuilding Europe following the devastation of World War II or threatened by the HUKBALAHAP insurgency, is a matter for historians.  But one thing is clear, our country managed to build its industry and manufacturing sector and became the second most developed nation in the whole of Asia.

The current global crisis is similar to the one that confronted us during the 50’s. We have an opportunity, ladies and gentlemen.  An opportunity to build a comprehensive economy where we as a nation produce what we need, interacting with the world but standing on our own two feet. We need not look very far for examples. Korea is an economic giant. Malaysia is also quite near there. Once agricultural economies, it took them only a few decades to become economic powerhouse using the path of national industrialization. Whereas we, a developing nation during the 50’s took us several decades of export oriented development to become the sick man of Asia.

For starters, we propose the following:

One, immediate suspension and review of all tariff reduction commitments especially on agriculture and local manufacturing industries.

Two, increased state investments in and promotion of local manufactures. We call for more state support for small and medium-sized entrepreneurs in form of increased credit and technical support.

Three, immediate increase in wages and salaries in order to increase the purchasing power of the Filipino consumers. This is especially important in the light of an expected downturn in overseas remittances.

Four, immediate buy-back of all strategic industries and corporations sold to foreign interest, especially petroleum and steel industry.

Five, increase protection to agriculture in order to raise farm gate prices and agricultural wages. The Filipino farmers comprise the majority of the population and we must do our best to increase their buying capacity of Filipino products.

Six, immediate suspension of the automatic debt reduction scheme and the implementation of a more rational debt payment mechanism.

And seven, creation of a body to formulate a national industrialization strategy.

Ladies and gentlemen, we cannot continue on our current path – the one pursued from one  Macapagal to the other Macapagal. The G20 summit will not save us, only ourselves. Let us unite under the banner of economic nationalism.

Speech sa KADAMAY

Sa ngalan ng National Economic Protectionism Association, ipinapahayag namin ang aming pakikiisa sa mga maralitang mga taga-lungsod sa inyong pakikibaka para sa disenteng pabahay, kabuhayan at batayang serbisyong panlipunan.

Subalit hindi natin makakamit ang layuning ito sa kasalukuyang administrasyon.

Patuloy na sunod-sunuran ang ating pamahalaan sa isang bulok na development strategy para sa ating bansa – isang development strategy na nagtatali sa export ng ating likas na yaman at ng ating mamamayan.

Ang medium term development plan ni Pangulong Noynoy Aquino ay pagpapatuloy lamang ng 40 taon development strategy sinimulan noong 1972.  Tulad ng mga naunang mga plano, iniuuna nito ang foreign investments sa anyo ng mga Private-Partnership Program o PPP.  Kumpara sa mga naunang privatization program ng gobyerno, mismong ang mga serbisyo ng gobyerno ay balak nang iprivatize. Sa di nalalayong panahon, mismong ang mga batayang serbisyo tulad ay privatized na.

Mga kaibigan, ang NEPA ay samahan ng mga makabayang negosyante. At bilang negosyante, interes ng NEPA na mapasigla ang kalagayan para sa pagnenegosyo para sa mga negosyanteng Pilipino. Pero hindi naming interes at hindi natin interes na ang mga batayang serbisyo ay gagawing negosyo ng iilan – lalu na ng dayuhan.

Nangamba din ang NEPA sa ilang mga programa ng pamahalaang Aquino para sa mga maralitang lungsod. Kanyang pansamantalang isinantabi ang mga relocation projects upang bigyang daan ang sinasabi niyang “programang balik-probinsya” para sa mga tinatawag na iskwater ng Metro Manila.

Sinabi niya na balak niyang bigyan ng tig-2 ektarya ng lupa ang mga tinatawag nilang iskwater sa mga lupaing publiko sa probinsya. Pero meron nga bang lupa sa probinsya?

Nalimutan ata niya na kaya maraming dumadayo sa Metro Manila ay dahil sa kawalan ng lupa at kawalan ng trabaho. At nasaan ang mga publikong lupa na nais niyang ipamahagi? Mga kasama, nasa bundok ang sinasabi niyang lupang publiko.  Payag ba kayong irelocate sa gitna ng Sierra Madre? O sa Cordillera?

Para sa NEPA, simple ang daan para kaunlaran – kailangan ng bansa ang pambansang industriyalisasyon upang malikha ang milyung-milyong trabaho para sa ating mamamayan.  Industriyalisasyon ang lilikha ng batayang pangangailangan. Industriyalisasyon ang puputol sa tanikala ng pagkakatali ng ating ekonomiya sa mga dayuhan.

Muli, ang pakikiisa ng National Economic Protectionism Association sa KADAMAY at sa mga maralitang taga-lungsod.