(The Philippine Star) | Updated April 1, 2013 - 12:00am
MANILA, Philippines - Filinvest Group president, CEO and director L. Josephine Gotianun-Yap has made the prestigious Forbes Asia’s 2013 list of 50 businesswomen for achievement in business. The select few have been distinguished for their stalwart performance in the world’s most dynamic region.
Gotianun-Yap, 57, joined 49 other prominent women in Asia and is one of two from the Philippines who, in the midst of global economic challenges, have steered their businesses into producing higher profits or have repositioned for better business pickups.
Gotianun-Yap climbed the corporate ladder to head the family’s various Filinvest companies. She helms Filinvest Development Corporation (FDC), Filinvest Land, Inc. (FLI) and Filinvest Alabang, Inc. (FAI) as president and CEO. FDC has assets valued at P239 billion and stockholders’ equity of P78 billion.
Within the property arena, Gotianun-Yap has spearheaded the expansion of the group beyond its traditional housing market to commercial developments that include the 244-hectare Filinvest City in Alabang, Muntinlupa, with the biggest regional shopping center —Festival Supermall and the dominant IT Park in the south — Northgate Cyberzone and the pre-eminent Palms Country Club in its midst. The country’s tallest office building, PBCom Tower, is also a development of Filinvest Asia Corp. The group has now amassed a recurring income base of over 300,000 square meters of leasable area.
FLI, the group’s major property subsidiary, is a leader in the mass housing market with dominance in the medium-rise building space through its Oasis and Spatial Brands and is the developer of the breathtaking 677-hectare mountaintop residential community Timberland Heights near Quezon City.
From being “property-centric,” the group has ventured into power generation and hotels. She is president and CEO of FDC Hotels Corporation, which developed the Crimson Resort and Spa in Mactan, Cebu, as its maiden project. Crimson Resort and Spa in Mactan has reaped various accolades, most notably the 2012 Certificate of Excellence by travel website TripAdvisor and the 2013 Recommended List of Conde Nast Johansens, a comprehensive illustrated reference to annually inspected, independently owned hotels. The newly opened Crimson Hotel in Filinvest City is now a landmark in Southern Metro Manila. FLI also developed the Quest Hotel in Cebu City, the top in its category. Gotianun-Yap aims to build up its hotel development and management business with the aim of creating a world-class Filipino hospitality brand.
Gotianun-Yap also holds a key position in FDC Utilities Inc., a company poised to deliver energy at a better pricing through embedded generation and cost-effective renewable energy sources. FDCUI has successfully signed up bilateral supply contracts and will soon be groundbreaking its 270 MW plant in Mindanao.
In banking, Gotianun-Yap is also a director of FDC’s banking subsidiary East West Bank. The Bank undertook an initial public offering in 2012 and has seen its share prices rise from the IPO level of P18.50 to the P30 to P35 range.
Outside of her corporate successes, Gotianun-Yap is recognized for her personal advocacy in education. “Education has the greatest impact, not only on scholars, but on generations to follow.” Gotianun-Yap helps the Educational Research and Development Assistance Foundation, which provides educational assistance and programs to poor children in Muntinlupa. FLI and its official endorser, TV host Kris Aquino, donate funds for five kindergarten classroom building projects of the Aklat Gabay Aruga Tungo sa Angat at Pag-asa Foundation (AGAPP), which is headed by Aquino’s sister, Pinky Aquino-Abellada.
Gotianun-Yap is a conference speaker on topics pertaining to family business at the Ateneo de Manila. She was recently a panelist in the HSBC Women’s Forum in Singapore on balancing family and business life. Gotianun-Yap holds a master’s degree in Business Administration from the University of Chicago. She is married to Joseph M. Yap, current president of Cyberzone Properties Inc. and Filinvest Asia, and is a proud mother of three.
Many people found it strange that Kris Aquino, the queen of massacre movies, paid a bigger income tax than the superrich Filipinos. While it explains why Kris does not have any difficulty changing gigolo-husbands, it does not explain why the richest Filipinos paid less. Where are the taipans and the tycoons? Where are the captains of industry? Where are the richest Filipinos on the Forbes Magazine list? Where are the 10 richest senators and 10 richest congressmen who appear on the annual list of the richest Filipinos? Where are Henry Sy, Lucio Tan, Ramon Ang, John Gokongwei, Manny V. Pangilinan, Manny Villar? Where are the Ayalas and the other billionaires? Yes, they are on the top 500 list but way below Kris.
The Lopezes, owners of ABS-CBN, First Gen and Rockwell Land, complained, asking why they are not on the list at all. And Megaworld owner Andrew Tan sent a statement to the Inquirer, showing he paid more than P60 million in income taxes in 2011, bigger than the P49.8 million that Kris paid.
So what happened to their income tax returns (ITRs)? Did they earn less than Kris? Did they cheat on their ITRs? Do they have smarter accountants and tax lawyers?
Not necessarily. It is because the list of the 500 biggest individual income taxpayers is limited to those who filed individual ITRs only. If you had substitute filing (meaning, your company withheld income taxes for you and remitted them straight to the BIR, just like in the case of regular employees), you are not on that list.
As Internal Revenue Commissioner Kim Henares explained, “If you did not file an ITR because you had substitute filing… it doesn’t matter how big your salary and tax payments are. You will not appear on the list.”
Let me explain further:
The list of the Top 500 Individual Income Taxpayers published by the Bureau of Internal Revenue is determined by the amount of taxes paid by individuals on income earned from compensation, or from the practice of a profession or from business that is run as a sole proprietorship.
The following types of income received by most businessmen are not included in the individual ITR because they are already subjected to a final tax at source:
1. Dividends from investments in shares of stocks are subject to a final withholding tax of 10 percent.
2. Interest on bank deposits, money market placements and other deposit substitutes are subject to a 20-percent withholding tax.
3. Trading gains on the sale of shares of stocks listed and traded in the local stock exchange are subject to the 0.5- to 1-percent stock transaction tax that stockbrokers withhold and remit directly to the BIR.
The assets of many businessmen consist of investments in shares of stocks in various corporations:
1. We can call these shares of stocks in listed companies as “paper money”—that is, not actual “cash money.”
2. This “paper money” is the basis of the Forbes list of the richest Filipinos. Its value is based on the prevailing stock prices of the businessmen’s listed companies at the time that the Forbes listing is being prepared.
3. Their corporations also pay corporate income taxes aside from the individual businessman/shareholder’s.
The corporations generate employment and business opportunities (for manufacturers, distributors, retailers, suppliers, contractors, middlemen, and the like), thus greatly contributing to the overall development and growth of the economy. Employment and business opportunities generated by these companies translate into more tax collections for government.
* * *
This coming May 1, Labor Day, labor groups will again be marching to ask for higher wages and more benefits for workers, as they do without fail every Labor Day. They will ask for more mandatory wage increases and the abolition of the hated “contractualization” system (by which employers, instead of hiring permanent employees, farm out the work they need—e.g., janitorial and security services—to other companies; or employ workers for five months only, then replace them with another batch for the next five months to skirt a provision of law mandating that an employee automatically becomes permanent after he/she shall have served for six consecutive months in the same company).
This time, however, the three biggest labor groups—Federation of Free Workers (FFF), Kilusang Mayo Uno (KMU), and Trade Union Congress of the Philippines (TUCP)—are aiming at different objectives. FFF and KMU are pushing, as usual, for higher wages while TUCP is calling for the creation of more jobs. As TUCP president and former Sen. Ernesto Herrera said, our immediate problem is the lack of jobs. Millions of Filipinos are unemployed. Labor should help government and investors create more jobs.
We need more investors to put up more factories and businesses. Right now, investors don’t want to come to the Philippines because of corruption, red tape, high power rates, and traffic jams (which delay the delivery of raw materials and finished products). If the labor component becomes too costly, investors stay away. If production costs are too high, the investors cannot compete in the international market.
Products from China and Korea are very strong in the world market because their labor costs are relatively lower. They can therefore sell their products for less. Products from the United States and other well-developed countries, on the other hand, are finding it hard to compete because they cost more to produce. Because of strong labor unions in these countries, wages are high and, therefore, production costs are also high.
“Let’s create jobs, first,” said Herrera. Let’s accept lower wages first. Then when the companies improve, we can ask for higher wages.
(The Philippine Star) | Updated April 22, 2013 - 12:00am
Megaworld founder Andrew Tan has complained he paid more taxes than the President’s sister but was ignored in the top taxpayers list released by the BIR. Tan, the chairman of Alliance Global (AGI) and Megaworld, claims to have paid P60.1 million in taxes for 2011. It’s unfair.
Tan’s business empire in AGI alone includes Emperador Distillers Inc., Travellers International Hotel Group Inc. (which partnered with Genting to operate Resorts World Manila), Golden Arches Development (Philippine franchise holder for McDonald’s) and Global Estate Resorts Inc.
I can understand Tan’s hurt feelings. How can an actress, no matter that she is the President’s youngest sister, be paying more taxes than him? It’s embarrassing.
But wait a minute… Tan seems to be protesting before he understood the basis of the BIR list. The list covers only those who actually filed income tax returns like me and others who are not awesomely successful entrepreneurs like he is. Maybe the BIR should have released a consolidated list covering all sources of income and all manners of tax payments. But that’s not the case.
Tan’s P60-million tax payment and Kris Aquino’s P49.87 million are apples and oranges as far as the BIR is concerned. Let us see why.
The bulk of Mr. Tan’s income is his very impressive dividend earnings of P518 million for which he paid a 10-percent final tax. He need not report this kind of income the way salaries and other income must be reported in an income tax return filed every April 15.
If at all, what is comparable to Kris is Tan’s P22 million in salaries for which he paid P7 million and the directors fees of P3.8 million for which he paid P1.2 million. He paid at the 32- percent rate for both. Maybe he was covered by substituted filing (if he is qualified at all) but it was not captured in the list released by the BIR.
Nevertheless, I am glad Mr. Tan made a fuss because he raised a good tax policy issue. Why should the hoi polloi like you and me who sweat it out daily to earn a salary being made to pay as much as 30 to 32 percent in income tax? That’s like working for government for close to four months every year compared to a little over a month for Mr. Tan.
Rich folks can do nothing more than play golf the whole year but only have to pay a 10-percent tax on the dividends they earn. Even the minimal interest earnings on our puny savings accounts are charged a 20-percent tax.
Of course I know that Tan is no idle rich. He works hard and earned his riches the hard way. But still, the dividend income he earned should be taxed the same rate our salaries are taxed. The tax laws should be framed so that income is income and every one must pay at the same tax rate.
It is bad enough that the working class is already paying its unfair share of value added and other consumption based taxes on basic necessities including food, energy, water and yes, cell phone bills. Alan Peter Cayetano told PhilStar editors last week that 70 percent of what we earn end up as taxes if you add up direct and indirect taxes.
Indeed, everyone knows the rich employ the best tax lawyers and accountants and are using so called tax avoidance practices. Commissioner Kim Henares mentioned in an interview that she is aware of their ploy of creating a personal holding company where the salaries and bonuses of high earning executives are paid.
Henares warned the wealthy not to “incorporate” even their personal expenses under separate companies just to minimize their tax liabilities. “You cannot book groceries for your household under a separate corporation, or the salaries of your helpers, or your mobile phone bills,”
I understand that “tax planning” is also why the Zobel de Ayala brothers are not on the big tax payers list. Fernando Zobel told my colleague Ichu Villanueva they are covered by “substituted filing” for the salaries they earn in much the same way as their clerks and janitors are.
That means their companies, Ayala and Ayala Land, withhold taxes on their salaries each payday. At the end of the year, their tax liabilities on their salaries are fully paid and they don’t have to file a return on April 15.
But I wonder if “substituted filing” applies to the Zobel brothers. I am sure that at least in the case of JAZA, he gets compensation from Ayala, Ayala Land, BPI, Globe, among many others. “Substituted filing” is only allowed if there is a single source of income. How are all the other compensation income accounted for?
Maybe that’s where the personal holding company mentioned by Commissioner Henares comes into the picture. But on top of that, I am told the Ayalas also have a holding company called Sonoma where the nine cousins hold equal shares.
I am told the way it works, all the profits declared by the Ayala companies for the family’s shares go to this company which has a policy to declare 80 percent dividend each year. Like Andrew Tan, the Zobel cousins only get taxed 10 percent on their dividend earnings.
This tax disclosure problem for the captains of business and industry is not going to go away. And particularly for the Zobels who are active in the Makati Business Club, the MAP and other self righteous business organizations that constantly demand transparency from government, the same level of transparency is expected from them too. How do they pay their taxes and how much?
It is a pity not too many people, not even Mr. Tan himself, realized that he opened a can of worms. Until Mr. Tan protested, few were aware how atrociously our tax law discriminates against the poor wage earners.
An inequitable tax system is bad for the economy, Warren Buffet, America’s best and wealthiest investor had been saying for years. Buffett said that he was taxed at 17.7 percent on the $46 million he made in one taxable year, while his secretary, who earned $60,000, was taxed at 30 percent.
Mr. Buffett believes a tax policy that favors the rich over everyone else accentuates a disparity of wealth that hurts the economy by stifling opportunity and motivation. See… we can’t even blame this tax policy on the workings of capitalism because a big practicing capitalist is saying this works against the economic system.
As one blog puts it (The Unofficial Stanford Blog) America has a huge disparity in income between its richest and its poorest citizens. If America has a big wealth disparity problem, I don’t know what we can call ours. Studies show that income disparity makes a huge difference in a person’s health and happiness... An unfair tax policy is apparently a violation of human rights.
Buffett has been advocating a minimum tax on top earners – like himself. His proposal is popularly known as the Buffett rule, something we need here too.
Here, we can also make the tax rule more equitable by bringing the top income tax rate down and bringing the tax on dividend incomes up. That should also be good for the economy. Ordinary folks will spend the extra cash and boost the economy while rich folks only tend to hoard it as the trillion pesos in SDA accounts prove.
Now that the government is embarking on an all out drive to get people to pay the proper taxes, our legislators must also review the tax code and make sure it is fair specially to the ordinary wage earners.
Alas, Mr. Andrew Tan… you complained too much. Confucius might have said there is wisdom in keeping one’s mouth shut when one is already so much ahead. But thank you anyway. By opening our eyes to tax inequity, you inadvertently did something good.
Mel Amado sent this one.
A woman walks into an accountant’s office and tells him that she needs to file her taxes.
The accountant says, “Before we begin, I’ll need to ask you a few questions. He gets her name, address, social security number, etc. and then asks, “What’s your occupation?”
“I’m a Lady of the night,” she says.
The accountant is somewhat taken aback and says, “Let’s try to rephrase that.”
The woman says, “OK, I’m a high-end call girl”.
“No, that still won’t work. Try again.”
They both think for a minute; then the woman says, “I’m an elite chicken farmer.”
The accountant asks, “What does chicken farming have to do with being a prostitute?”
“Well, I raised a thousand little peckers last year.”
It has been some time since a person of national consequence spoke about the need to create a vibrant middle class, the dream that animated pre-1960s nationalists and post-Edsa democrats alike. For that alone, Sen. Edgardo Angara’s address at the graduation rites of the University of the Philippines last Sunday was noteworthy. But his speech, which drew necessary attention to the importance of the middle class, also prompts uncomfortable questions about who, exactly, make up the middle.
“A strong middle class is the backbone of civil society,” Angara said. “[It] is the voice of reason that moderates vested interests, the force of change that compels societies to invest in their own future.”
This is a view with a history; it goes back to the likes of Jovito Salonga and Jose Diokno, to Horacio de la Costa and Lorenzo Tañada and Jose P. Laurel, all the way to Jose Rizal and the reformists of his time.
Angara, who is rounding out his fourth term (and 24th year) in the Senate, is a former UP president with a deep interest in history. (He is also a political kingpin in his native Aurora province, and the father of a three-term congressman running for the Senate; questions about his true legacy, about the political dynasty he has founded, and the political and economic advantages he may have enjoyed through his mastery of law and legislation, will continue to be raised long after he leaves office on June 30.)
Angara’s historical understanding was on display when he rooted his discussion of the role of the middle class in the experience of the ilustrados—the so-called enlightened ones, that 19th-century generation of educated Filipinos symbolized by Rizal himself, out of whose ranks came the thinkers and leaders of the Philippine Revolution.
Today’s middle class is like the ilustrados of the 19th century, the senator said, because the class to which the graduates he was addressing belonged is “our country’s greatest resource of talent and potential.” This resource is all the more vital, he said, given the radical changes that have swept over Philippine society in the last several decades. But—a significant point—it is not only the Philippines that enjoys the so-called demographic sweet spot; countries like Vietnam are in the same race to develop a true, enlightened middle class. However, he added: “Whether these new ilustrados will be aware of their identity and conscious of their social role is an entirely different matter.”
Rhetorically and intellectually, linking the history of the ilustrados with the role of the new graduates was a bold move on Angara’s part; when he was UP president, and for a decade or so before and after his term, the very concept of “ilustrado” was derogatory in UP and in other schools. It meant someone who was rich enough in the late 19th century (and therefore implicated in the Spanish colonial regime) to get an education in Spain. Many educated Filipinos today still use the word in that context; for instance, when Sen. Chiz Escudero endorsed the vice presidential candidacy of Jejomar Binay in an influential commercial three years ago, he said his candidate was not ilustrado, meaning Binay was not (born) rich.
But in fact the word only means an enlightened person, and applies equally well to such illustrious heroes as the penurious Apolinario Mabini, the proletarian Emilio Jacinto, and the largely self-taught Andres Bonifacio. None of them studied abroad; all of them helped shape the nation.
It was in this sense that Angara exhorted the new graduates of the country’s premier university to see themselves as the new ilustrados.
We have to ask, however: Is this concept of the middle class too limiting? We can understand the premium Angara places on a college education, but how many of the millions of students who enter the first grade make it all the way to a bachelor’s degree? What about the laborers who failed to finish their schooling, the farmers who cannot leave the land they till, the fisherfolk whose only classroom is a temperamental sea? Will they never be part of what Angara and many other national leaders before him call “an enlightened middle class”?
Doubtless, the new graduates have a crucial role to play in developing a modern, more competitive, more equitable country. One of their first tasks, however, may be to forge a definition of the middle class that, as in other constitutional democracies, does not depend on college education alone. That middle class should include Bonifacio’s numerous heirs.
Last Sunday, Sen. Edgardo Angara was the commencement speaker at the University of the Philippines Diliman. His challenge to the graduates was to build a middle class, which he said was a potent force for the social transformation of the country. Senator Angara did express concerns that the middle class was too small, maybe even “vanishing.”
The next day the International Monetary Fund raised concerns that emerging Asian economies, including the Philippines, are susceptible to the “middle-income trap,” where the economies stagnate at middle-income levels rather than move on to high-income status.
By coincidence, I’ve been attending meetings this week with Dutch and Filipino partners in a project called Emit, or Escaping the Middle-Income Trap. Emit is a joint project of Erasmus University in the Netherlands and UP, with support from the Dutch government agency Wotro.
For the Philippine component of the research, we are looking at the Calabarzon (Cavite-Laguna-Batangas-Quezon) area in Southern Luzon, which best exemplifies what this MICT (the academics’ jargon abbreviation for “middle-income country trap”) may be.
A few months ago I wrote a column “Hope in the South” about the economic boom in an area that includes some towns in Laguna (notably Santa Rosa), extending to Silang and Tagaytay in Cavite. There’s a real estate boom, numerous shopping centers selling branded (the genuine ones) products, export processing zones. Several of Metro Manila’s best schools have set up branches there: Xavier Nuvali, St. Scholastica’s, and De la Salle, with Miriam and the University of Santo Tomas to follow soon.
I was there on Labor Day and could feel the upbeat mood of people there, one of unbounded optimism of still better times to come. When I told my UP colleagues in the Emit project about this, one of them remarked, “Sounds like a gold rush.”
The “gold rush” began with the export processing zone that did create new jobs, mainly for women to work in assembly plants. In more recent years, the BPOs (business process outsourcing centers) provided another infusion of capital, and jobs, for the area. Perhaps as, if not more, important than the export processing zone and the BPOs is the export of labor. Entire towns have been known to adopt Italian architecture because money is sent in by Filipinos working there.
But grinding poverty remains, made even more glaring because of the trappings of development—for example, a new city hall, or shopping mall. The Emit project at UP is still gathering data to look at why this is happening in the Philippines. The project involves a lot of very quantitative research looking, for example, at company investments, employment generation, as well as other new economic activities. We are particularly interested in how foreign firms may stimulate local firms as suppliers of goods and services.
The UP School of Economics is handling the numbers-crunching while the UP College of Social Sciences and Philosophy will be doing more qualitative research, gathering “stories” from households, communities and companies about their perceptions and experiences of development.
Research involves testing of hypotheses (kutob in Filipino), and we have no lack of such hunches. The IMF’s advice early this week to the Philippines and other middle-income countries is to improve infrastructure and diversify exports.
The Emit project is interested in getting more detailed information around the transitions from one stage of development to another. Our Dutch counterparts (who include a Filipino, Annette Pelkmans-Balaoing, and a management professor, Rob van Tulder) have been creating databases to look at countries throughout the world, comparing their trajectories of development. Central to these trajectories is “positioning,” being at the right place at the right time in a global value chain. This early, it is clear the Philippines has persisted at producing “low-value” products in this global chain, and we need to work more on our educational system to produce graduates who can innovate and create new higher-value products and services in a world where so much wealth is being created through knowledge-based industries.
I thought of Nuvali with all its plush stores, selling expensive products produced in other countries (notably China), while local products are still limited to snack items and trinkets. The other week I wrote about a National Academy of Science and Technology forum, where expert economists described the Philippines as going through progeria, a medical condition where we prematurely mature—that is, failing to develop our agriculture and manufacturing industries, we jumped into a service-dominated economy that benefits mainly the upper classes and, to some extent, the middle class.
The last Labor Day observance left many workers unhappy because there was no new wage hike. But this vicious cycle will continue, the poor kept in an endless battle for higher wages that just can’t keep pace with spiraling costs of food and essential commodities, thanks to our neglect of agriculture and manufacturing.
I thought, too, of Senator Angara’s warning about the precarious existence of our small and perhaps vanishing middle class. One of his most striking observations was that “a single stroke of fate—one accident, calamity, or crisis—can send you (the middle class) falling through the cracks.” I’ve seen that all too often as a university administrator, with middle-class students having to drop out because of an illness in the family, or an overseas worker parent being laid off and unable to get a new job at home.
If there is an MICT that threatens the Philippines as a nation, there is, too, a similar trap that middle-income Filipino families should try to avoid. We are not very good at diversifying: Look at Internet marketing sites like Sulit and you’ll find everyone trying to sell the same products (usually imported electronics). In terms of our children’s education, we go for the flavor of the month—hotel and restaurant management, for example.
Mind you, the problem is not so much with the course itself as with our ability to innovate, to create a market niche. An education major with good training may find a job, for example, as a curriculum engineer. The other night I had dinner with visiting professors of a Taiwan university that was now offering all kinds of innovative degree programs, including one in vegetarian nutrition. It may sound strange putting in four years to study vegetarian cooking and nutrition, but we’ve seen how Taiwan—poorer than the Philippines until the late 1960s—has been able to anticipate new needs, and to develop innovative technologies for those needs.
Escaping the MICT is not just about infrastructure and technology. Inclusiveness, referring to the involvement of all economic classes in society and a sharing of the benefits of development, is central as well to escaping the MICT. We’re looking, with much apprehension, at how much of this inclusiveness has accompanied development in the Philippines.
If anyone feels the MICT, it’s the poor, with the “T” perhaps not so much a trap as a treadmill. Hard work, maybe even good exercise, but not moving forward.
(The Philippine Star) | Updated May 10, 2013 - 12:00am
The reaction among politicians to the phenomenal economic growth being experienced by the Philippines appears to be divided between those who see it as a half-filled glass and those who see it as half-empty. One side of the political spectrum claim credit for this achievement and brook no criticism despite certainly valid points being raised on poverty and job creation. The other side includes those, who are in Henry David Thoreau words, “fault-finders who will find faults even in paradise”. But even discounting the fact that this is also the “silly season” – meaning the election campaign period — where politicians are given to hyperboles and impractical solutions, both sides make a valid point. It cannot be denied that this is indeed a remarkable achievement and a validation of President Aquino’s program, in which “Daang Matuwid” is the underpinning. Equally, to deny that poverty incidence remains high and that joblessness continues to be a major challenge would be doing a great disservice to the efforts to make this economic growth sustainable and inclusive.
This is why I think NEDA director-general Arsenio Balisacan, a well-known expert on poverty, should be commended for not couching his report in the language tailored for this “silly season” of political spin. Some say this might not have been a good time to release the report so kudos too for the administration’s countenance of this report. But numbers do not lie though their interpretation can perpetuate a lie. The 2012 poverty report says that the poverty incidence since 2008 is unchanged and as a matter of fact not much changed from the 31-percent poverty incidence during the time of President Ramos. An important point to be made however is that during the same period our population base grew by more than 30 percent. This would have required our GDP to grow at a rate of around seven percent minimum for it to make any significant dent on poverty. This rate is the commonly accepted yardstick based on modeling and on the actual experience of countries like China and Indonesia. In our case, we averaged around four percent during this period. In fact our real GDP per capital rate in 2010 based on purchasing power is lower than the per capita rate in 2000!
Focus on education
Fortunately there are people who have not lost sight of the fact that “every system is perfectly designed to produce the results it gets.” Since our poverty incidence has remained intractable for the past few decades, it must mean that our present system is “perfectly designed” to keep a third of Filipinos in poverty and must therefore be overhauled if we are to solve this problem once and for all. For this issue, I would like to focus on one component of this system - education as it relates to job creation.
Obviously poverty reduction is complex, with multi-stakeholders. Even with the right policies in place, it will take some years before a sharp reduction is experienced. It will take a combination of low population growth and sustained economic growth to achieve this. Even then not everyone will necessarily share the fruits of economic growth - there will always be pockets of poverty geographically and demographically even in the highest growing economies. They include children, single-parent households, indigenous and tribal peoples and those who cannot take advantage of the opportunities offered by economic growth by virtue of their skills and location relative to the employment. Then there are those living in areas that are poorly endowed, far from the sources of growth or are racked by instability and failed governance – the combination of which have made the ARMM as the poorest region in the country. It is therefore important to look at the sources of this high economic growth and its distribution, in particular, its implications for job creation. To take this to the extreme by example, many of the unemployed and underemployed are in the rural areas and not everyone can be a call center agent or a BPO provider – there are not enough openings anyway to accommodate them all. There must be other sources of employment – in agribusiness, manufacturing and services – where the vast majority of our unemployed can qualify – must be created. Job creation and poverty rates are inextricably linked. The challenge is formidable. World Bank country director for the Philippines Motoo Konishi estimates that the Philippines must create 14.6 million jobs between now and 2016 if the political aspirations of inclusive growth are to be fulfilled.
Much has been made of the so-called “demographic dividend” which they say the Philippines is poised to enjoy as countries in the region face an aging population. Indeed it is the consumption of this large, relatively young population that is propelling the country’s economic growth. In a paper presented to the 35th Pacific Trade and Development Conference in Vancouver in June 2012 by Emmanuel Jimenez and Elizabeth M. King, the World Bank pointed out the benefits from the “demographic dividend” is not automatic and requires a massive effort to obtain, and even more difficult to sustain.
The authors, Jimenez and King, say that almost a half century ago, the famed Swedish economist Gunnar Myrdal predicted that Burma (Myanmar) and the Philippines were the two Asian countries most likely to achieve rapid growth in the Asian region. This prediction, since proven to be inaccurate, was based partly on the fact that the Philippines and Burma accumulated more human capital than other countries in the region – based on the literacy and educational levels of its population. “In 1960, the secondary school enrolment rate in the Philippines was 26 percent — higher than that of Malaysia and Hong Kong and, in fact, higher than that of Portugal and Spain. At 10 percent, secondary school enrolment rate in the poorer parts of Burma was much lower, but still exceeded the rates of countries that are now significantly richer, such as Indonesia and Thailand.” We know that what happened to Myanmar was largely self-inflicted. The case of the Philippines was a little more complicated – population pressure not matched by income growth – overburdened the school system, lowering its quality and depriving others of educational opportunity. While our participation rate at the secondary level has risen steadily, it has since been exceeded by Indonesia and Thailand.
East asian tigers
In contrast, they point out that the growth of the so-called East Asian Tigers — Hong Kong SAR (China), Singapore, South Korea and Taiwan (China) — was built on “astute investments in schooling and training and enhanced by a demographic dividend made possible through falling fertility rates. The demographic dividend meant that when young people became workers they not only had more schooling but they also had fewer dependents to support.”
The authors say that the “tiger cubs” — Indonesia, Malaysia, the Philippines and Thailand — are well placed to emulate the Asian tigers. But they would need “to adjust to dramatic demographic shifts” and ensure that education systems deliver the skills needed to boost productivity and meet the needs of a changing global economy. This will require a “vigorous response” from the education systems. Yet the track record of these systems is mixed – that is to say the quality of education and training in some cases – is not up to par with global standards or are not relevant to current and future demands. Recent surveys have in fact shown that despite the increasing number of educated youth, firms in the region say that finding the right people remains a significant obstacle to their growth.
Our education system must be improved to achieve the objective which the authors outlined and which they themselves say are quite known and accepted, but poses significant challenge in implementing: “matching the skills being acquired today with those that will be needed in tomorrow’s global markets; stimulating demand for human capital formation among excluded groups; providing second-chance learning opportunities; reforming higher education; and facilitating the movement of educated labor to where it can be used most productively.” In other words, quality is just as important as expanding quantity for education opportunities.
The fact that writing about one component of the social and economic system – education – has taken up all the space I have for this column and with more that still need to be said about this alone confirms that poverty reduction is a complex task encompassing a broad array of factors - health, population, capital investment, infrastructure, rural development and many others. What is clear is that the system as it currently stands is inadequate to meet the challenge. It has to be overhauled if it is to produce new results. The simple message is creating jobs is the most effective way of addressing poverty. Obviously this needs the convergence of different stakeholders towards a shared understanding of the intractable issue as well as a coordinated response and collective action. In other countries, they do a national summit and a national compact. I am sure there are people in the Cabinet who can put this together.
I have been monitoring the hunger incidence statistics of the Philippines as reported quarterly by SWS for over ten years, as long as I have been involved with the Gawad Kalinga movement. Because I was a late-comer in anti-poverty work at that time, I remained observant but quiet. I thought I could not speak up when I was just like most people I knew then—uninterested, uninvolved and concerned with a million other things.
Along the way, I grew more intimate with poverty from consistent presence in areas where the poor were, getting to know them better, deeper involvement with community organizing, working with volunteers and partners, and helping design community programs. All the time, I always remained watchful about hunger. And when I knew the terrain much better, I began to write about it.
Wanting to understand why the Philippines, a country so rich in almost everything, was inexplicably mired in massive poverty, I was forced to turn to history. In my whole lifetime, poverty was already a reality in the Philippines. And since governance by Filipinos began only in 1946 despite claims of independence earlier, I could not blame any government administration of causing poverty. Of course, government may be very guilty in perpetuating in what it could have substantially mitigated in the last 67 years, but not in causing the massive poverty we have.
There is no doubt in my mind that poverty was a direct consequence of Spanish colonization, specifically in taking control of land that belonged to the people. Land in the 16th century was more meaningful that what it is today. When everything was agricultural then, land meant everything that man needed aside from his own skills and administration. Land meant home, land meant food, land meant security, land meant opportunity, land meant the past, the present and the future.
When Spain engineered the largest land-grab in our history, the people’s slide to poverty began. Only a few were spared from it, mostly local leaders who allowed themselves to be used by the foreign masters to control the rest of the natives. Only a few, then, were spared from the massive poverty that ensued in the centuries to come. These included the peninsulares and the insulares who, together with cooperative local leaders, became the first elite.
The landlessness of native Filipinos led to poverty, led to homelessness, led to hunger. There was just no other explanation for poverty, not at the national scale it reached. That there are always poor people around may be understandable, but not when it reaches 90%, as in the D & E classes of the Philippines. The saving grace is that livelihood is now not anymore totally dependent on land. Landless OFWs are earning enough to buy home lots and build sturdy homes. They are also lifting themselves out of poverty without help from the government and the elite.
But the point is not only about poverty but one of its most horrible faces— hunger. I have written many times that hunger shames us as a people. It shames government. It shames the Church. It shames all the non-poor among us. Beyond being a shame, it places a curse on us, not just the administration in power, not just the cardinals and bishops still active in their service, but all of us who can feed someone who is hungry but does not.
It is extremely difficult at this time not to be angry about 20 million Filipinos experiencing hunger. There is something that is inhuman about it, not that there are hungry people, but that there are people in strategic positions who end up doing nothing. It is not as though it is only now that millions have experienced hunger, it has been reported by SWS for at least 15 years.
We have a Catholic Church that expended great effort to wage war against the RH Bill, to create Team Patay during the campaign. My God, if my God is the same God they believe in, the same Bible we read has Jesus Christ asking on Judgment Day, “When I was hungry, did you feed me?” Is that kind of message so hard to understand or have the priorities of religion been flushed in the toilet bowl?
We have a spokesperson for the President of the Republic who, when asked about the latest hunger incidence report, says that “they do not take the survey results alone as the sole benchmark used by the government for its poverty-alleviation priorities.” Well, Ms. Valte, if you speak for our President, please take the hunger incidence report every quarter with the utmost interest, priority and sympathy. Do not make people believe that the President is simply more interested in defending his policies than getting more hungry people fed.
In truth, who cares about poverty-alleviation priorities when people are hungry? The success of anti-poverty programs can be appreciated only when hunger is effectively and substantially reduced. In other words, if the CCT claims that it has helped millions of families, it is like saying the SWS surveys are terribly understated, that the two or more million families that the CCT says it has reached used to be part of the hungry. Either the CCT is completely inutile against hunger and dishonest about its failures, or there used to be more than thirty million Filipinos experiencing hunger.
I thought that an Einstein saying was most relevant only to elections. But it seems even more relevant to poverty and hunger. Einstein said, “Insanity: to do the same thing over and over again and expecting different results.” In attempts to ease poverty and hunger, what I used to think was only stupidity is actually insanity according to Einstein.
But what may be the unkindest cut of all for our millions who experience hunger is not government, not the Church, but the rest of the Filipino people who are not hungry and who make no effort to feed the hungry. It is Philippine society as a whole, its perversion from a culture of bayanihan to one that cannot think beyond oneself and one’s family. How sad to realize that, by how we have treated them, nobody really cares about the hungry.
Sometimes, we need a foreigner to articulate a truth so we can confront it. Dan Brown, author of the bestseller, “Inferno”, a fiction and sequel to previous books like “Da Vinci Code” and “The Lost Symbol”, mentions Manila in ways not so flattering. In fact, MMDA Chairman Francis Tolentino reacted quite sharply to Brown’s choice of Manila and his choice of words to describe the city – or metropolis.
There is some basis for Tolentino’s objections for the book’s characterization of Manila as “six-hour jams, suffocating pollution, horrifying sex trade…” The six-hour traffic jams are true only if we have a tropical storm like Ondoy flooding Manila in 2009. The suffocating pollution depends on how pure an environment someone’s lungs have been used to. The face masks of MMDA traffic enforcers, though, indicate they are affected by pollution. And sex trade is present, indeed, but a billing that Manila shares with many other cities in other countries. I do not know what horrifying means – is the author thinking of volume or perversity?
Tolentino said that the book used terrible description of pollution and poverty. Too bad, because pollution is dirty and a killer, and poverty is even dirtier and a greater killer. I cannot speak of other places beyond Metro Manila, but there is no denying that the metropolis is polluted. The pollution is not only in the air, which to me seems to have improved, but it is also in the garbage. Garbage dumps are way below standards, and garbage in the canals and rivers even worse. I think pictures of the big floods that have hit Metro Manila depict just how thick uncollected garbage is.
But Dan Brown was kind on poverty. The real poverty in the Philippines is indescribable. It not only affects almost 30 million Filipinos because that is truly understated. Filipinos who know they are poor and honest enough to say it reach 50 million or half of the population. Thank goodness that “Inferno” was not meant to tell the story of poverty in the Philippines because the author could have been more graphic and voluminous.
Poverty has been reported mostly in statistics. These reports in no way come close to the reality of poverty, the pain, the hopelessness, the constant fear of not surviving, and then the greater fear of surviving in hell. Gates of hell? No, poverty is past through the gates, poverty is hell itself.
Brown did not even get to the hunger. If he had concentrated more on Manila, it would not have been a work of fiction anymore – it would not have used anything else but the truth to describe the dire reality of how poverty depraves the poor among our people. A storyteller tends to be more articulate and interesting than statistics. Numbers are cold, words are warmer, pictures are hot, and audio-video is graphic.
But Tolentino is concerned about the truth that had been conveniently left out by the author. There is beauty in Metro Manila, beauty not only in edifices but also the culture of the Filipino. Beyond beauty, there is opulence that can make many forget that there is poverty, too, horrible, terrible poverty.
My concern about trying to show the other side of Manila is that it shames us as a people for being most uncaring to the darker side of life. If we show the glitz, if we show the awesome food we can cook and present in restaurants, if we show the commercial centers, the condos and exclusive villages, if we show the wealth of the rich and powerful, these will become scandalous when contrasted with the pollution and poverty that “Inferno” referred to.
I know Chairman Tolentino is only trying to show a side that is also true, especially a new governance that is more sensitive and concerned about the poor. The macro is even more outstanding, the aggressive economic growth, the surging stock market, the call centers and BPOs, the construction boom, the exciting tourist avalanche. I believe this is what Chairman Tolentino did not want to be just omitted because it is real as well, it is dramatic as well, and it is bringing the country where we want it to go.
We should not too concerned about good news being locked out this time. Look at the approval and trust ratings of the President – at 70% or more after three years in office simply says that the people know about the good news, even the poor. Even more than what Filipinos feel and say are what non-Filipinos feel and say. The financial institutions and rating agencies have been one uninterrupted source of admiration. The global business world is looking closely, and investing heavily. P-Noy is the darling of the world, and the Philippines the enviable host for both business and fun.
What we should be constantly reminded of are issues which keep us down, which hold us back, and for which we attract scorn. And these are poverty and hunger as the worst of them all. Corruption, primarily because of P-Noy himself, is viewed as being addressed, far from perfect but being addressed.
Dan Brown and his term, “the gates of hell”, are necessary reminders, even quite gentle ones. The discomfort that we suffer by being called so is, by far, incomparable to the suffering of our poor. Dan Brown is not a Filipino hater, and neither am I. But until we hate hunger and poverty as a people, we deserve to be confronted with the truth in its ugliest form.
Over and over, I have said this, and time has only made me more convinced that our journey to progress and a bright tomorrow will find serious humps and obstacles until we care more deeply for our own.
Manila is not the “gates of hell” Dan Brown described in his latest novel “Inferno.” If anything, it is worse. Brown and observers like him see only the shell of poverty, the part of it that is visible from a car or from a walk on the edge of an urban poor area near their hotel. They don’t know the truly awful scenes in the heart of the slums and they don’t know the people. And most Filipinos have little more real knowledge of the slums than our foreign friends do.
Foreigners and most Filipinos lack an understanding of why the slums are here, how little is done to help the urban poor, and how much courage and self-sacrificing love exist in the slums. Cardinal Chito Tagle and Pope Francis have urged us to listen to one another as a precondition for understanding one another: To understand all is to forgive all.
Yes, in the slums there are pimps, men ready to kill for P500, drug lords, child prostitutes, parents who encourage their children to become prostitutes; there are drunks, lazy people, opportunists, violent husbands, vultures who prey on the weak, and all types of bad characters. There are, however, as I have experienced in my 43 years of work in the Tondo-Baseco slums, men and women, especially women, of near-heroic love and unselfishness.
I also believe there are embers of compassion in all our people, so that a gesture of concern by a decent government or an engaged Church, or a group of young people, can fan the embers into flame and into genuine concern for the very poor. Why worry about what Dan Brown or others say? We will be judged on what we do to help the poor who are there before us, as Jesus promised they always would be.
Let me give an example of what embers of compassion look like and how these can be fanned into life. We were driving on Aurora Boulevard in front of St. Joseph’s Church last week when we saw coming toward us, against the traffic, an older man, a scavenger, pushing a kariton that was piled high with the stuff he had gathered during the night. On top of everything was a cardboard box turned upside down, and balancing on the box were two small puppies. The box tilted this way and that and the puppies looked around for help. The man, who seemed to be in his sixties, was smiling at the dogs and reassuring them they were safe, and perhaps for a few hours at least he was smiling at life itself. After all, he had finished work and had earned his P150 or P200 for the night. He was on his way to the junk shop to sell his stuff and then he would head home for breakfast and bed with his puppies.
Then something remarkable happened: None of the drivers around us blew their horns at the man for coming against traffic and slowing them up in the rush hour. Ordinarily, these same drivers would be furious at a wrong-way driver. People have been shot for blocking traffic. Here no one was angry. They sympathized with the old man. Compassion was still alive.
Maybe the drivers liked the old man’s self-reliance and jaunty air in the face of poverty and old age. Maybe they liked his affection for the puppies. Whatever the reason, the drivers saw him as a good man in need of help. If there were a program for the old man, they would readily have signed on.
Let the old man stand as a symbol for the urban poor and the rural landless poor and the tribal people hustled out of their land by mining companies and others. The job of the government, the Church and ourselves, I believe, is to awaken the interest of all people in the poor of the country. Like the old man, most of the poor are decent, interesting people.
The poor need help. No one escapes poverty by himself or herself. Not Batman, Superman, or even the Irish superhero Finn McCool, who is so strong he can lift himself up by the scruff of his neck, can manage to get out of poverty unaided.
What might a program for the old scavengers and people like him be? We should note, first of all, that if he has a home, he is fortunate. There are hundreds of scavenger-families who sleep at night in or alongside their kariton. Let us talk about what can be done for them. At night they pull their wagons up on the sidewalk wherever they can and huddle together for the night, more like people in the Tabon Caves 50,000 years ago than residents of a modern city. They are liable to be beaten or robbed, or rousted by the police or by security guards, or well-off people who fear the presence of homeless people.
Suppose we set up camps around the city where the poor scavengers can come at night, where they will have water and be safe, where perhaps a medical person can examine the sick and the children can get a bite to eat, and maybe some tutoring. Can Ateneo de Manila University, Miriam College and the University of the Philippines open their parking lots at night to the kariton of the poor and homeless? The security guards are already in the schools to keep an eye on things. The homeless people will be safe and will leave in the early morning.
The schools can become homes of peace and compassion for the hundreds of young and old people who are literally homeless in the Cubao area.