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5.30.2007

CONTRASTING FACES



This is not a serious article. Mea Culpa.

It's a sad day for press freedom in Venezuela as students protested the Chavez government's refusal to renew the permit of the country's oldest TV station.

Despite being rich, Britney confessed to being sad.

Despite bad economic situations, Filipinos' are constantly on top of the "Happiness Index". However, it is not surprising to find out that its businessmen are also topnotchers in the global list of stressed out businessmen.

On 2005, 75% of the country's total businessmen reported being terribly stressed. This dropped to 64% on 2006 but it is still way above the global average of 56%.

"Despite the huge drop in stressed-out executives, the Philippines is still way above the global average of 56 percent. Among the countries surveyed were Sweden with only 27 percent, Ireland (35 percent), the UK (37), the Netherlands (37), France (37), Canada (39), Poland (40), Spain (41), Australia (41) and the US (43).

The countries with the highest tensed businessmen last year were China (84), Taiwan (82), India (79), Russia (76), Botswana (70), Singapore (69), Hong Kong (67), Malaysia (64), the Philippines (64) and South Africa (64)."

5.29.2007

THE PRESSURE TO SUSTAIN ECONOMIC GROWTH



Just when the developing economies have started posting positive figures, the latest World Bank report has shown that it is not a good time for them to start resting. The World Bank warned that increases in interest rates will tend to slow growth and might make foreign investors look elsewhere.

"Looking ahead, the key challenge facing developing countries is to manage the transition by taking preemptive measures aimed at lessening the risk of a sharp, unexpected reversal in capital flows," it added.

That should include economic and institutional reforms, the report's main author, Mansoor Dailami, said in an interview. "Basically, they do need to maintain and strengthen investor confidence in their policy apparatus," he added.

It is a good thing that a lot of poor countries have already paid billions of foreign debt. Otherwise, more problems can be expected on 2009-the year when the World Bank predicts global growth rates will decline (to 3.5% from 4% in 2006).

The latest addition to the list- the Philippines recently prepaid its dollar denominated debts to the IMF. Its dollar reserves are also at its all time high but there are local calls for the government to help its exporters.

Let us not mince words by calling an intervention to the forex rates a form of subsidy. The developing countries are protesting the US and EU's farm subsidies. Therefore, it is but logical for them to desist from subsidizing their exporters by intervening in the forex markets.

Should the government abide by pegging the value of its currency, the growth of its dollar reserves can be expected to slow. At worst, it may even decline. this column's call is for the government to let the market dictate. Uncompetitive industries should not be subsidized to the detriment of the entire economy. Remember, there is 2009 to prepare itself for.

5.28.2007

CURRENCY APPRECIATION AND THE COMPETITIVENESS OF ASIAN BPO FIRMS

Further to the prevailing currency issues, BPO.Asia reported today that Asian BPO firms are a bit nervous due to the continuous rise in the value of Asian currencies. The BPO industry is currently being dominated by Asian countries led by India but European and other countries are also trying to get a bigger slice of the action.

In the long run, the forex movements of the currencies of countries that hosts BPO firms will largely determine its competitiveness in the outsourcing world.

My appreciation/devaluation solution is simple. If salaries comprise a large portion of every BPO firms cost structure, why not base it, for the most part on performance? Another solution will be to pay the wages in the currency of the company’s contract with the clients. The solution is very fair and will keep the companies largely competitive.

Whoever follows this formula, will surely win the race.. :-)

5.25.2007

DOHA round. GMA. Shinzo Abe. Comfort Women.

My warm regards to US educated Philippine President Gloria Arroyo for taking the cudgels of the developing states and hitting at the US for its discriminatory trade policies. She's always been known as a US ally, owing to her close association with Georgetown University classmate Bill Clinton. In the aftermath of 9/11, President Arroyo was also one of President Bush's strongest supporters.

Let's enjoy her some portions of her yesterday's speech in Japan.

Philippine Star:
“When trade served their interests, it was the green light. Now that they might have to give up certain subsidies or markets, the yellow light of caution is up,” Mrs. Arroyo said of rich nations.

Philippine Daily Inquirer:
"The Doha Round was called the development round because it was supposed to bring the benefits of the global trading system to developing countries, she said at the opening of the 13th Future of Asia conference here.

Arroyo said the developed countries let the developing countries down when, realizing they would have to give up their subsidies or markets, they put up the “yellow light of caution” in the Doha Round.

“We will not just wait around. We aim to go full speed ahead in the Philippines and ASEAN [Association of Southeast Asian Nations] to strengthen our economic ties, regardless of what Doha does or does not do,” she said.

Arroyo, the chairperson of ASEAN’s revolving leadership this year, was the keynote speaker at the forum that gathers the region’s leaders to discuss their vision of an emerging East Asian community."

In other developments, radio reports quoted Pres. Arroyo of being confident that the Japan-Philippines Economic Partnership Agreement (JPEPA) will be ratified by the Philippine Senate after PM Abe assured her that Japan will not be dumping toxic wastes into the Philippines. In the past, several containers from Japan were found by Philippine Customs officials to contain toxic materials (such as hospital wastes). A bigger number was feared to have successfully been dumped (through the years) into the country.

PDI:

"Reports quoting Philippine Ambassador to Japan Domingo Siazon had said that a side agreement to the Japan-Philippines Economic Partnership Agreement (JPEPA) would likely be signed to make the deal more acceptable.

Arroyo submitted the agreement to the Senate late last year for ratification.

Groups opposed to the agreement wanted scrapped a provision that they alleged would allow Japan to dump its wastes on Philippine soil. In return, Japan will open its market to Philippine nurses."

I have a couple of issues here. A free trade agreement with Japan exposes the Philippines to several non trade tariff barriers. Japan can easily stall the prequalification of Philippine agricultural commodities and stop it from entering the Japanese market. A similar scenario happened when Australian authorities strongly refused entry to Philippine mangoes due to some alleged safety issues. An angry Philippine agricultural secretary countered by banning the importation of Australian beef. At the end of the day, Australia softened.

Another issue that should have been raised is Japan's continuous moves to water down and eventually erase its ugly role in the second world war. In a trade agreement that will result in the entry of more Japanese goods into the country, a simple apology to the comfort women should be a minor thing to ask.

5.24.2007

HIGH GAS PRICES?

CNN.com reports the increasing gas prices in the US that started on May 13. The current average is now above US$3.00 per gallon which is 12.9% increase from last months figures. To make matters worse, more increases are expected due to a projected increase in demand during the summer season.
"AAA warned in congressional testimony last week it believes prices will approach $3.25 a gallon over the next 60 days.

Even with the record gas prices, AAA is predicting a record number of Americans will be hitting the road during the holiday weekend, with 38.3 million expected to be traveling 100 miles or more, up 1.7 percent from a year ago. And most of those - 32.1 million - will be driving, according to the motorist group."

The current pump prices may be worrying us too much but let us examine an old post in this page. Today's price of crude as posted at http://www.oil-price.net, is $65.89/barrel. A few months ago, an article quoted a BBC news report that interviewed experts who estimated the real price of oil to be around $182/barrel. Are we on our way to that level?

Scared?

Related Post: Oil Prices

5.21.2007

CHINA BOOST YUAN's FLEXIBILITY

Are Chinese officials reading my blog? Hehehe..! Just daydreaming.

Anyway, as an update to my previous post, the Chinese monetary officials have agreed to let the Yuan's value rise or fall by as much as 0.5%. The previous limit was 0.3%. The move was way below what this site advocates. However, it cannot be denied that it is a positive move towards lesser intervention. Let's hope that China increases the allowable limit soon. It will surely be good for everybody.
"China's central bank said Friday that it will widen the yuan's daily trading band against the dollar to 0.5 percent, just days ahead of a key meeting with the United States to discuss trade issues such as the value of China's currency.

The People's Bank of China also said on its Web site that it will raise both deposit and lending rates, as well as the proportion of deposits that banks must hold in reserve.

--CNN.com"

5.18.2007

IMPLICATIONS OF THE YUAN'S OVERVALUATION


American lawmakers are raising serious questions regarding China's alleged currency control measures. According to a CNN.com article, some US legislators and economists believe that the Yuan is overvalued by as much as 40%, making Chinese products unusually competitive in the export market.

A deliberate move to restrict the appreciation of a currency's value is currently viewed as a form of export subsidy and some believe that it has greatly contributed to the huge volume of Chinese exports to the US. At this point, there exists a huge trade deficit between China and the US, with the latter on the losing end by as much as US$233 (2006).

This column believes in minimal government action as the best way of running an economy. The Chinese government can best support its citizens by minimizing its intervention in the currency trade. If the currency's value is allowed to fall freely, uncompetitive companies will lose in the export market and die a natural death.

Sad it may seem, it actually eliminates the country's uncompetitive industries, therefore allowing the Chinese workers to transfer and acquire better skills, in areas where the country has competitive edge. In the long run, it will lead to a more competitive China.

Related article: Peso Gaining way too fast

5.17.2007

Venezuela's Local Councils Experiment


Digg!
Venezuela Lets Councils Bloom

Venezuela's recent experiment to allow local councils to take charge of community affairs is reminiscent of the Philippine Barangays. When the national government placed a lot of power in the hands of the local leaders, the idea is for the people in the locality to have sufficient power to resolve the affairs of the community.
"Thousands of councils have been founded nationwide, and they have made decisions on almost everything from trash collection to school construction."
There is a lot of wisdom in this program. However, since let Venezuela learn from some the experiences of the Filipinos:

1. The delegation of power should come with corresponding access/control over funding. Otherwise, the local communities will be become toothless tigers.

2. Local access to funds exposes the country to additional possible sources of corruption. Some of Venezuela's local councils are experiencing that, at this point.
"The councils have been buoyed by success stories in some neighborhoods and tarnished by cases of corruption and incompetence in others."
3. Giving power and prestige to the local councils will lead to an increased level of politicization in the lower levels. In the Philippines, the barangay elections has already become highly politicized.

Blogger Power

Apple claimed that it was a bogus email that was quoted in a popular blog. However, within minutes, the article sparked a massive decline in the company's shares and the company lost US$4 Billion.

If the story is indeed untrue and/or if the value of the decline in prices will prove to be below the level of the stocks value, a recovery should be on its way. However, there are a lot of people who lost money within 24 hours and some who are bound to make a killing by buying when the stock prices are at its lowest levels.

The pen is indeed mightier than the sword and those of us who wield it should do so responsibly.

Sources: Johnchow.com, techcrunch.com, digg.com

5.16.2007

Peso gaining way too fast

A newspaper headline (today) reports that the Philippine currency is gaining way too fast. What does this mean?

In economics, we were taught that a currency devaluation is not neccessarily bad. Devaluation encourages exports and discourages importations. For the Philippines, the peso has been on a constant decline for a long time and since a lot of consumer items are import dependent, consumers have been complaining about the reduction of their purchasing power.

Since 2006, the currency started to appreciate and now, exporters are being largely hit. Their costs are in peso and the export prices are dollar denominated. The appreciation of the peso have suddenly made them uncompetitive. In order to compete, they are forced to sacrifice by reducing their prices but their problem continues. Every decrease in their selling prices are being overtaken be a fast appreciating peso.

Its a a tough scenario for this businessmen. However, my stand is for the government to let the peso find its true value and not intervene. The Philippines must find its true level of competitiveness and compete in areas where it is superior.

Besides, the consumers stand to benefit from all these.

5.11.2007

GLOBAL COMPETITIVENESS RANKS

The US topped the World Competitiveness Yearbook 2007.

From the Philippine Star:
"The US economy maintained its position atop world competitiveness rankings, despite a record trade deficit, its high corporate tax rate on profits and low confidence in the government’s handling of public finances, according to an annual survey released Thursday."
Just wondering, were the huge US farm subsidies ever considered in this ranking?

In the same report, the Philippines slipped from 42nd (2006) ~45th (2007), despite its current Balance of Payments (BOP) surplus, record strong currency and gains in the BPO sector.

This is in contrast to the Global Competitiveness Report 2006-2007 published by the World Economic Forum (WEF) on September 2006 where the US slipped from 1st to 6th and the US is supposed to have gained a bit from its previous year's ranking.


RELATED POST: Global Competitiveness Rank 2006

Para que, Abe?

"Unless an acknowledgement of the war crimes become permanent, Japan should never be allowed to build its military, as a preventive measure. Its troops in Iraq should immediately be sent home, joint military exchanges/programs with other countries should be cancelled and their involvement with the UN in military programs should be permanently banned. Martial knowledge and enhancement through foreign experiences and technology transfers should be stopped. The unrepentant villains of World War II should not be given the chance to re-arm and strengthen. For once again, it might use it's sword, as a tool for military conquests and oppression. Abe, never again. No mas. NUNCA! "
Newsweek's International Periscope discussed Japan's determined lobby to purchase F-22 Raptors, the most advanced and lethal fighter plane today. In addition, the same column mentioned that the country has previously acquired AWACS, a powerful surveillance/radar aircraft. Other than that it also bought tankers that can refuel the AWACS, enabling it to continuously operate for extended or even indefinite periods.

This column recognizes the threats against Japan that needs to be addressed. After all, every country has the right to defend itself. However, in light of recent events, the permission to sell advanced weaponry to Japan should not be given with haste.

What is obvious to a lot of people is a pattern of Japan's aggressive stance which can also be seen as military posturing.
  1. A search of the blogosphere and news archives will reveal that Japan's population, especially the youth doesn't know the full extent of the country's World War II responsibility. For a few years now, news about Japan's attempt to revise its war role in the country's history books has made a occasional surfaces. Just recently, the Japan's PM Abe and the parliament, has made a serious and brazen attempt to revise history by denying the existence of "Comfort Women".
  2. Japan's military has been actively seeking foreign experience and war technology. It has a sizeable force in Iraq and for sure, a lot of its military officers are elsewhere, seeking advanced training.
  3. And now, the raptors (right after the formidable AWACS and tankers).
This column agrees with Luigi (please read here), when he advocated a strong condemnation of Japan's recent posturing together with corresponding sanctions. Those who are unrepentant and in denial of their grave faults committed only 62 years ago, should remained leashed.

RELATED ARTICLES:
- Comfort Women
- Comfort Women
- Comfort Women
- Nanking Massacre
- The Distortion and the Revision of History in Postwar Japanese Textbooks, 1945-1998
- Writers of the Japanese History Textbooks Revise 6 Korean Related Items
- Experts Hit out at Japanese Textbook Revision
- Newly Approved Japanese History Textbooks Anger Asian Neighbors
- The liberation of Manila