Press Release
July 16, 2009

The Socio-Economic-Peace Program Sen. Chiz Escudero

A former Prime Minister of the United Kingdom, Sir Harold Mc Millan, once said, "It is not the things that one did in one's life that one regrets, but rather the opportunities missed."

If we, the Filipino people, were to view the last 60 years, they may be termed as the decades of missed opportunities.

After the 2nd World War, the Philippines had the second highest per capita GDP in Asia. Today, we have one of the lowest.

During the 50's, the Philippines had one of the highest standards of education in Asia. Many of our neighbors sent their sons and daughters to study at our institutions of learning.

Today, we are ranked so poorly in achievement scores. The average high school graduate in Japan has a better knowledge of science and mathematics than the average Filipino college graduate.

During the 60's, the Philippines produced enough food to feed her people. Today, we are the biggest importer of rice in Asia.

During the 60's and early 70"s, the Philippines had one of the lowest electricity rates in Asia. Today, we have the highest.

Prior to martial law, we had only around a million Filipino immigrants to foreign countries. Today, estimates reach nine million Filipinos who have voted with their feet.

The question we all must ponder is - what is wrong with us?

Why does our march down the road to development seem to be a pattern of 3 steps forward, 2 steps back?

Today, we have been asked to present to you our "socio-economic-peace program" for the next six years.

My friends, there have been dozens of economic programs these past 60 years. I myself have seen so many Medium Term Development Programs prepared by very capable men and women from government, academe and the private sector.

So what I will present to you this afternoon will not be anything new or novel to you. What might be different is the approach or the priority given to some sectors or programs.

Let us agree on our common goal. As public servants, we serve the highest interests of our people. Primarily, we seek to eliminate poverty and improve the quality of life of every Filipino.

In a market economy, this means striving for higher family income, a highly educated and/or trainable workforce, better health care, affordable food and housing and peaceful communities.

The intermediate goal is the creation of millions of new jobs and livelihood opportunities. This would necessitate being able to successfully attract much greater amounts of direct investments, especially foreign investments.

To succeed in enticing investors, we submit that whoever becomes President should focus on 6 areas of priority:

First, on my list would be Good Governance. We must repair our house. Many of our institutions have been severely weakened. The trust and faith in the fairness of such critical institutions as the Comelec, the Dept. of Justice, the AFP-ISAPH, the PNP, the Sandigan aside from the chronically corrupt Bureau of Customs and the Bureau of Internal Revenue.

We must have a stable policy environment. No more ATRAS - ABANTE.

We must enforce the laws and enforce them speedily. People will obey and follow our laws if there is certainty of punishment.

We must enlist the best and the brightest to serve in government, and pay them a salary equivalent to what they would earn in the private sector.

We must follow the principle of subsidiarity -- devolving authority to the lowest level of government which can handle the problem. Regions and provinces, cities and municipalities are tired of waiting for Imperial Manila to act on their problems.

As soon as the national government can afford, a larger percentage of the Internal Revenue allotment should be given to local government units. It is presently 20%. By devolving added responsibilities, this could eventually go to 60%. This would speed up the development of the countryside.

Second, we must strengthen our finances. This year, we will suffer the biggest budget deficit in history - almost P350 billion. This means P4,000 of new debt for every man, woman and child. On top of the P50,000 each one already owes our lenders.

Such budget deficits are unsustainable. We must put a stop to smuggling - estimated by foreign institutions to be as much as $10 billion (as P480 billion) a year. The uncollected VAT alone would be over P50 billion.

Third, we must invest in our youth and in our future.

There is a Chinese Proverb, which says, if you plan for one year, plant rice. If you plan for ten years, plant trees. If you plan for 100 years, plant people.

It is accepted fact that the world has been moving from an economy of goods to an economy of knowledge. And knowledge is the single most important resource to any advanced society.

We must give our children the equal opportunity to develop their minds and bodies to the fullest. We will continue, even expand, the conditional cash transfers (or CCT's) to the poorest families so that their children will have the means to get to school and the nutrition to support a healthy brain - and body. We must cut down drastically that 34% drop-out rate in primary grades.

The higher the knowledge and skills of our workforce, the higher their earning power. Whether they decide to remain here or go abroad, the economy will benefit because of their remittances.

Government must provide the hardware - classrooms, desks, chairs, and the software - books, teacher retraining.

The reported backlog of 40,000 classrooms is unjustifiable. At a cost of P500,000 per classroom, it would cost only P20 billion to build everything. That's only one year's income of PAGCOR. I am incredulous how the future of millions of Filipino children has been irretrievably lost because of the insatiable greed of those in power.

In California, the entire net income of its grant California Lotto has been exclusively earmarked for its schools.

We should align government subsidies to private and public colleges with courses that meet the demands of the market. Like engineering and computer sciences.

McKinsey and Company has a new study that shows that the persistent gap in academic achievement between children in the United States and their counterparts in other countries deprived the U.S. economy of as much as $2.3 trillion in economic output in 2008 alone. Can we imagine how much that academic gap has cost us in potential income?

Fourth, we must be self sufficient in producing our basic food staples such as rice and corn and fish.

Agriculture development is an activity very close to my heart because my father, now congressman Sonny Escudero, served as Secretary of Agriculture under 2 presidents.

And this has an economic impact on Filipino families. The average Filipino household spends about 52% of its income on food. 17% alone goes to buy rice or corn grits.

While the average Malaysian or Thai household spends only 34% of its income on food.

By lowering their expenditure on food, we would be awarding every family with an increase in disposable income, and mitigate labor demands for wage increases.

Let us be reminded that the poorest families belong to the agricultural sector. 40% of our labor force is directly dependent on agriculture. Another 20% are indirectly dependent.

Increasing research and development budget to 5 percent of the agricultural production (GVA=P1.17trillion) would bring about better varieties and more efficient farming methods which would increase yields and give the farmer higher incomes even while farmgate prices go down to benefit the consumer.

We must supply post harvest facilities. Our rice farmer loses as much as 20% of his palay harvest using antiquated threshing and drying methods. If we could save only one-half of that (or 10%), there would be no need for rice importation. We might even end up with a surplus.

We should try to make seamless the transport of agricultural products from Mindanao to the Visayas and NCR; from the Cordilleras and the Cagayan Valley to Manila. From farms to bagsakans or markets or seaports.

Fifth, we must fast track our infrastructure development.

Aside from pump priming our economy, we would be bringing down the cost of transportation and opening up those areas of our country which have not been developed.

We must prioritize projects already partially built. Half a bridge is equivalent having no bridge at all. Then we have to focus on widening our major arteries. Especially where traffic jams occur daily. The wastage of people's time and fuel runs into billions not counting the inefficient use of trucks which deliver goods.

Sixth, we must make our goods and services globally competitive - As such, every administration must put a very sharp focus on lowering the costs of doing business in the country.

We already spoke of lowering costs of food, labor, and transportation.

Now we must move heaven and earth to lower energy costs. We must complete the sale of NAPOCOR generating plants and PPA contracts to the private sector to generate more competition. Thus far, only about 40% have been privatized.

It is unconscionable that this government charges more royalty on the sale of our very own natural gas from Malampaya than it taxes imported coal and fuel. We pay P1.40 per kilowatt hour for electricity from generated from natural gas and only P.17 per KWH from coal. Does that make any sense to you?

We should consider lowering our income tax rates to equal Hongkong or Vietnam or Thailand. One of the major reasons why many locators do not like the Philippines is because they would have to pay their executives more takeout to equalize take home pay. For example, Hongkong has a tax rate of 17% while our marginal income tax rate is 32%.

Lastly, we must lower bureaucratic costs. This refers to "under the table" payments.

Most business executives accept that bribes and grease money are costs of doing business in "soft "states.

You bring in a container, you pay P200, 000 but only get a receipt for P60,000. Meaning that P140,000 goes to the bureaucrats and tong collectors.

We sign a contract for a North Rail that cost $17 million per kilometer while the equivalent cost in Shanghai is $7M.

We witness the President approve a contract with ZTE for $328 million which turned out to be overpriced by as much as 60%.

All such shenanigans bring up the cost of doing business in this country.

These are our six priority areas. But I should add the Environment and Tourism.

The former will guarantee a healthier life for future generations and upholds the principle of stewardship - that we are merely caretakers of the world which we presently inhabit - And that we must hand on to our children the land and waters in as good a condition as when we inherited it from our fathers.

Tourism is an economic activity that leverages on the beauty that our Creator willed to us. It will also encourage development of the far reaches of our country. And it would complement efforts to protect the environment.

What can I say about the peace efforts with our Muslim brothers and the NPA?

Let's begin with one principle: it is better to talk, than to shoot.

But these two have been intractable problems for decades, even a century. Their root causes have been social injustice and economic injustice. Brilliant minds and experts have been harnessed to tackle these problems. And still the problems persist.

I possess no silver bullet or magic wand. But this much I can promise - we will ensure that each and every rebel shall realize that he or she owns a part of this land we love, that whatever our creed or color, our political beliefs or ethnic group, we are first and foremost Filipinos.

This is where I would like to bring up the subject of equity. Economic statistics show that although there has been GDP growth over the past 23 years, the number of families living in poverty has increased - up to about 5 million families or 27.6 million people. This demonstrates that benefits of that growth have accrued to the wealthy. The rich have gotten richer and the poor have gotten poorer. This is clearly unacceptable to all of us.

It is particularly galling to read a United Nation country report released in April 2008 that "poverty reduction in the Philippines has logged far behind that of Indonesia, Thailand, Vietnam and China.

These are countries that started with higher levels of poverty incidence than our country but have successfully managed to lessen, if not virtually eliminate, extreme poverty.

Whoever gets himself elected President in 2010 will have a steep mountain to climb.

Which bring us back to my original question: What is wrong with us? Why do we Filipinos always shoot ourselves in the foot?

Perhaps the answer can be found in an old African adage: "If you want to go fast, go alone. But if you want to go far, go together."

Whoever wins, whoever gets to lead our country, let us pledge to work together and rally behind him. By working as a team, by going together, it is a certainty that we will go farther.

I pray that that common commitment would be the result of these debates.

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