From the Author: A great speech stems from the ability of the writer to research critical data that will add flavor to the material. This speech gives a brief background about what Marikina City has achieved since its inception.
Ms. Marides Carlos- Fernandez, Mayor of Marikina City;
Councilor Ponciano Ubaldo, Head of the LED-C ;
Council members of Marikina;
Fellow speakers, ladies and gentlemen;
A pleasant morning to all.
Thank you for inviting me to this very special event.
Marikina City has definitely gone a long way since the Jesuits first arrived here in 1630. Now, Marikina’s critical role in our national development is underscored by its notable achievements, having consistently won the Most Competitive Metro City in the Philippines Award given by AIM and having created the World’s Largest Pair of Shoes recognized by Guinness Book of World Records in 2002. Because of these, I know that many would now want to be in the shoes of Mayor Marides Carlos- Fernandez.
The drive for excellence of the people of Marikina will definitely be a shining beacon as we face the shockwaves of today’s global financial crisis.
Your theme: “Marikina City’s Network to Sustain Local Economy” is a timely call for all stakeholders to focus on solutions and strengthening partnerships rather than being fixated on the problems hounding the globe today.
Of course, we all know we live in a world of turbulence. Everywhere, from all parts of the globe, people talk about the global financial meltdown. Some even predict that unlike the 1907 Banker’s Panic and the 1929 depression, this will be the imminent economic Armageddon or the end of business as we know it.
But we must remember that the world survived two world wars and the global economy progressed exponentially until September 2008 when the sub prime crisis and its derivatives imploded. Over time it has been proven that economics is a cycle and sometimes problems heal by themselves and oftentimes nursed back to health by timely and effective intervention by government.
Recently, Iceland declared bankruptcy, the first and only country that I know which has done so. The member countries of G20, USA, Germany, Britain, France, Japan and some others officially declared recession. Other smaller economies admit an economic slowdown while others are still in denial.
Paul Krugman, an economist, says that the usual rules of economic policy no longer apply during depression or deep recession and I quote, “Virtue becomes vice, caution is risky, and prudence is folly.” He was, of course, referring to urgent public spending and the need for pump priming stimulus versus the need to balance the budget.
Today, the global capital market is a battle between fundamentals versus emotion. And for those who are affected, your best defense is to take your day-to-day feeling out of the picture.
Stop watching CNN and Bloomberg for a while to avoid an unnecessary anxiety. The cures are still troublesome because the saga is still unfolding. After $4.5 trillion bailout by financial authorities worldwide, the Citigroup- Amercia’s 2nd largest bank with $2 trillion in assets- is now being rescued with a $300 billion aid package. Meanwhile, China is in a sharp slowdown prompting it to issue its own $586B stimulus package over the next 2 years to boost consumer spending. Others followed with big band aid programs but these bailouts appear tentative as the ending is perpetually changing.
How many more countries will go into recession still remains to be seen. The contagion is just beginning. It is precisely because of this that nobody has, as yet, been able to determine the exact magnitude and depth of this crisis. Worst, the crisis grows and spreads across the globe- driven not so much by fundamentals but largely by fear and loss of trust in the whole financial system. The meltdown we are now seeing are not slow motion events. They are wild and chaotic with rapidly spreading side effects.
What then is the impact of all these developments on the Philippine economy? Let me enumerate 5 of them:
1. Slowdown in export growth as the economy of trading partners decline. (Our electronics which make up for more than 50% of our country’s total export recorded a decline).
2. Tightness in global credit markets resulting in high interest cost for new debts. (There is a 4% add- on on the LIBOR as country risk premium plus other charges which means new debts could be obtained at a cost between 11-17 % p.a.)
3. Flight of the speculative capital, hot money, or investment portfolio (More than a billion dollars left in the 1st eight months this year).
4. Decline in stock values (40% lost value compared to the pre-meltdown period).
5. Pressure on the peso and financial institutions with global investment exposure (Peso weakened to almost P50/ $ versus P42 a few months ago.)
Luckily, there are some mitigating factors that partially cushion the negative impact. I can cite 5:
1. Lower petroleum price (from a high of $147/ bbl, oil prices dropped to below $50.
2. Lower prices of imported steel and wheat. (Reducing cost of Construction and Food.)
3. Sustained and increased OFW remittance (at $1.5M/ mo. versus $1.2M- last year’s average.
4. High savings rate (at 26% of GDP)
5. Relatively strong banking system after the 1997 Asian currency crisis.
Given all these, we still need to face with confidence and courage the challenges of further mitigating the negative impact on the poor and vulnerable, sustaining job creation, and directing accumulated liquidity in the financial system to productive investments.
Undoubtedly, for the Philippines, the high growth we have experienced in the past is over and will not be back for some time as the world continues to struggle with the current financial turmoil.
With the expected sharp decline in consumer spending, government, in partnership with the private sector, must immediately pump prime the economy even with the threat of breaching the targeted budget deficit.
On this score, you will be pleased to know that in our PBC in October this year, PCCI proposed and government accepted to create a P100 billion stimulus package for infrastructure spending. The fund will be contributed 50/ 50 by GFIs and the private sector and the upside is, spending from this fund will not impact on the budget deficit. The mechanics and other details with respect to use, accountability and transparency, structure, sovereign guarantees, monitoring and control are still being worked out by PCCI with DOF, DBP, SSS, Landbank, GSIS, NEDA, and NDC in several meetings since early November. We hope to be on the ground early next year.
In addition, PCCI advocated and urges government economic planners to put our house in order and make our economy more resilient and globally competitive so that as the world turns for the better, we are ready to seize the opportunities.
In this regard, PCCI has identified and will focus in the next 2 years on 4 key basic areas: namely: Food, Infrastructure, Re-engineered Education, and Energy (or F.I.R.E.) Our advocacies in Tourism, Trade, Legislative Agenda, and other sectors will remain actively in place).
Why these 4 sectors?
First, Agriculture employs a third of our country’s workforce. Paradoxically, we teach other Asian neighbors scientific technology on rice production at IRRI, Los Baños. And yet we are the biggest rice importer in the world. We import 10% of our rice needs because we are losing 28% of our palay harvest due to poor and inefficient post- harvest facilities. Investing in such facilities to reduce losses will improve our chances of being a rice exporter once again.
Second, Infrastructure is a key factor that directly affects the country’s global competitiveness. An efficient transport network will reshape the country’s physical and economic configuration.
From fragmented island economies separated by mountains and seas, the country can develop a unified and integrated economy where people and goods can move and trade swiftly and efficiently.
Third, according to CHED, only 40% of the yearly 400,000 college graduates are able to land jobs within a year after graduation. The rest becomes part of the rising statistics of unemployment rate. This is caused by many factors, one of which is the mismatch between skills of our graduates and the requirement of the industry. PCCI has joined the Presidential Task Force on Education together with the Department of Education, TESDA, CHED and other stakeholders in the academe, and 8 selected industry champions (shipping, shipbuilding, wellness, steel, mining, tourism… to name some) who will participate in our skills upgrading program to address the mismatch.
Fourth, on Energy, PCCI advocates a predictable energy policy to level the playing field. We are drawing a roadmap to influence policy makers to achieve supply/ demand balance using the right and appropriate mix for our country’s power generation sector. This is aimed at promoting energy self- sufficiency at competitive cost.
As you can see, we are not helpless. We can even turn around adversity to opportunity. But all PCCI chambers, business organizations, and councils, government and all stakeholders must work together in perfect unity to endure and overcome the global economic turmoil. Let us not only look forward together. Let us journey together.
My best wishes for the success of your Education Summit.
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