Satur C. Ocampo | Can We Trim Poverty by 10% in Five Years?

By SATUR C. OCAMPO
At Ground Level | The Philippine Star
Posted by Bulatlat.com

Is the government merely tinkering with figures on poverty and economic growth, or is it honestly and sincerely trying to achieve real economic goals?

This is the question that struck me after reading the news reports on the briefing jointly given last Tuesday by the National Economic and Development Authority, the National Statistical Coordination Board, and the Department of Social Welfare and Development. Why?

First, NSCB Secretary-General Romulo A. Virola reports that the NSCB has approved the use of a “refined methodology” in estimating the poverty incidence in the Philippines to “attune it with international standards.” By using the new methodology, Virola says, the 1991 poverty level has been recomputed to 33.1 percent (reducing the number of poor by 4.6 million).

But, still by the same methodology, the poverty rate increased slightly in 2009 to 26.5 percent, from 26.4 percent in 2003.

At the estimated 94 million population today, this means that 24 million Filipinos live in poverty. The NSCB points out that in 2009 each Filipino needed P954 a month for food, and P1,403 to stay out of poverty; a family of five needed P4,869 monthly for food, and P7,017 so as not to be deemed poor.

Second, the recomputed 33.1 percent level in 1991 happens to be twice the 50 percent poverty reduction target for the Philippines after 25 years, under the United Nations Millennium Development Goal, or 16.6 percent in 2015. Since the adjusted level now is 26.5 percent, Virola concludes, the economy must reduce the poverty incidence at the rate of two percent every year in the next five years to attain the 2015 MDG target.

Can this be done?

NEDA Director General Cayetano W. Paderanga thinks that “a 7-8 percent economic growth is the level needed to make a dent on poverty.” Other economists concur, provided that growth at such level can be sustained over a stretch of 7-10 years.

However, the independent think tank, Ibon Foundation, qualifies that economic growth can only be meaningful if it creates more employment and increases people’s incomes.

Achieving 7-8 percent growth (in the gross domestic product) is the government’s goal for 2011 onward, affirms Paderanga. Yet he cautions that this may be more achievable in 2012, when some of the public-private partnership (PPP) projects being lined up for public bidding shall have been on stream. He cites the 2011-2016 Medium-Term Philippine Development Plan that the NEDA is preparing, which will include the PPP projects.

Paderanga is hopeful that efforts to boost investments in tourism, agriculture, and agro-industrial projects can spur growth both in the relatively developed urban centers and in backward rural areas, where poverty is pervasive.

Still questions are raised about the government’s lack of plans to develop agriculture, particularly to improve production of the nation’s staples towards self-sufficiency to eliminate dependence on importation; reduce the production costs of millions of small farmers, and raise their dismal incomes.

One economist has cited a Food and Agriculture Organization report that shows Filipino farmers (like Indonesian and Bangladeshi farmers) getting only 47 percent of the farm-gate wholesale prices of their crops from traders, compared with 63 percent for Thais, 62 percent for Indians… and 94 percent for Chinese.

As regards the PPPs, the Board of Investments last Tuesday presented 10 front-line projects at a forum for members of the Joint Foreign Chambers (American, British, European, Canadian, Australian, Japanese, Korean) and representatives of foreign embassies. The JFC strongly urged the government to develop a “pipeline of bankable PPP projects.”

The projects are four expansion and privatization plans for the MRT/LRT; airport developments in Bohol, Puerto Princesa City, and Daraga, Albay; privatization of Cagayan de Oro’s Laguindingan Airport operation and maintenance; and two expressways (NAIA and Cavite-Laguna).

Question: how much will these PPP projects contribute to poverty reduction at the two percent annual rate envisioned by the NSCB and NEDA?

Incidentally, the government is grappling with how to devise clear-cut measures to protect foreign investors from “regulatory, legislative and judicial risks” that President Aquino promised in his inaugural address last year.

The JFC is pressing hard for such protection, in light of the financial disputes and protests over the implementation of build-operate-transfer projects under the previous administration, such as the NAIA-3 and the South Luzon Expressway.

Another case is the recent cancellation by Malacanang of the contract on the Laguna de Bay rehabilitation project awarded to a Belgian firm, even as it was found legally valid by Justice Secretary Leila de Lima.

By the way, this is not the first time the government tinkered with the manner of computing the poverty level. In 1994, under the Ramos administration, the government lowered the poverty rate by more than five percent through simply removing families from the category of those considered poor if they could afford to buy simple furniture, cigarettes and liquor.

But what we must all understand is that increasing the GDP growth rate at whatever benchmark cannot substantially reduce — much less eradicate — poverty, unless the wealth derived from the increased value of goods and services produced is equitably distributed among the people.

Equitable distribution is the real test for any and all governments today.