Medalla says stimulus not needed here

Published by rudy Date posted on February 20, 2009

A former economic manager said Thursday that he sees no need for a stimulus fund in the Philippines.

Dr. Felipe Medalla, a former National Economic and Development

Authority director general under the Estrada administration, said he is convinced that the Philippines would be fine without the stimulus package amid the global financial crisis. He explained that the reason is that the Philippines is not dependent on exports.

Medalla noted that while the country’s export products net $50 billion in revenues, $12 billion of it accounts for raw materials. He added that the figure accounts for just 8 percent of the economy, and as such, the number won’t reach alarming levels even if exports contract by 20 percent as predicted.

“North Korea and Myanmar are [also] not affected, because these countries do not make business and engagements with other countries, unlike Taiwan, United States, and the European countries which rely on car and computer exports, among others,” he said during the Philippine National Budget Monitoring Project Training Workshop on Budget Communications held in Pasig City on Thursday. “The Philippines is somewhere in the middle of the pack so the effects won’t spill over that much.”

Another factor, according to Medalla, is that Philippine banks have sound lending policies and insignificant exposure to failed American financial institutions, like Lehman Brothers.

“The Philippines is somewhat insulated,” he said. “The threat is very minor. A stimulus plan will just be used for political motives.”

Overseas workers

Medalla, also an economics professor at the University of the Philippines, earlier disputed reports that Overseas Filipino Workers are the highly vulnerable to the financial meltdown.

“Getting a good worker is a huge investment, and the Filipino workers are the best in their respective fields. Employers cannot get rid of good workers easily,” he explained.

Household service workers or domestic helpers are also relatively protected amid the crisis, since families would rather cut down on all expenses except the cost of hiring a household helper, he added.

Susan “Toots” Ople, president of the Blas F. Ople Policy Center that deals with labor issues, agreed with Medalla.

“I have been to places where Filipino migrant workers thrive, and the employers’ reluctance to let go of Filipino Workers is very evident,” she said.

But Ople cautioned that Filipinos should not be complacent, and that OFW interests lack adequate protection. “We should not forget that their remittances play a crucial role, not only propping our economy but the domestic consumption as well.”

Looking ahead

Ople, formerly a Labor undersecretary, said the Philippine economic situation is bound to get worse. She added that data about job losses from the Philippine Overseas Employment Administration (POEA)—34,500 local workers, plus 5,400 retrenched OFWs—are also a cause for concern.

“These layoffs will greatly affect the household income,” she added.

Like Medalla, Ople was skeptical about the government’s proposed P10-billion stimulus plan that will channel funds for student loans, education, building classrooms, medical services and dental health and food production, even assistance to laid off workers and small and medium-sized enterprises.

Earlier on February 9, the government held a multisectoral meeting where officials came up with a target to create 800,000 jobs in cooperation with the departments of Environment, Agriculture, Public Works and Highways, Labor, Trade, Education and Health.

Ople said she had written to various government agencies involved in the job-creation program to ask about the projects under the stimulus fund. But only Social Security System President Romulo Neri sent a reply, which said that infrastructure projects under the said stimulus fund are not yet final.

Help poor instead

For Medalla, what is needed is for government to intensify its conditional cash transfer program for the poor, which is part of the Pantawid Pamilyang Pilipino program. It is a development and poverty-reduction strategy that provides cash loans to extremely poor households to help them afford basic necessities, such as health care, nutrition and education.

But the recipients must satisfy certain conditions, including a 85-percent attendance in school for children, regular visits to the doctor and getting vaccinations, and attending responsible parenthood sessions for expecting mothers.

A family with up to three school-age children may qualify for a cash assistance of up to P1,400 a month or P15,000 annually—if they comply with certain government conditions.

“The best solution to this problem is giving money to the poor, who comprise the majority of Filipinos, because that will boost market consumption,” Medalla said. “Vigilance transcends passing a stimulus plan, and empowering the poor is far more superior to any stimulus plan.” –Llanesca T. Panti, Reporter, Manila Times

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