Wake Up, Philippines!

Protect education funds from the crisis

Posted in Congress, Education, Investment, Legislation, Personal Finance, Pre-need Plans, SEC by Erineus on February 3, 2009

WHEN PRE-NEED COMPANIES selling educational funds started dying a slow death more than 10 years ago, many Filipino families turned to do-it-yourself investing to grow savings for their children’s education needs.

Now it appears that these alternative investments–mutual funds, unit investment trust funds (UITFs), stocks and bonds–are not living up to the hype. Last year, pooled funds were down around 40 percent and experts say investments in the stock market might take two or three years to recover.

Saving

These depressing events have shaken Filipinos’ confidence in this most basic principle in personal finance: Saving. Imagine this, just when you have conquered spending urges and socked away money regularly, the market turns and eats up most of your money pot. This has not been easy for one mother, who shared she lost most of her educational fund for her daughter to the closure of one rural bank.

“The Rural Bank of Paranaque is now closed. This makes me sick to my stomach. So, how should I prepare for my daughter’s college education? I have to invest in a better mattress to put my money under,” she says.

It’s truly a cosmic moment for many couples faced with the triple whammy of skyrocketing tuition fees, lower pay hikes if not job loss and shrinking savings.

But Micheas P. Dumlao, 45, who has two sons to put through high school and college, says it is still better to start saving early.

“It has been at the back of my mind for the longest time, but my wife Joyce and I realized just last year that it is time to prepare for my sons’ college education. If we don’t start now, it will be harder later on,” he says.

Micheas’ and Joyce’s son Michael Reuben is a first year high school student at the Philippine Science High School, the state’s premier school for intelligent children and tuition is minimal. If he gets into the University of the Philippines in three years, also another state college, tuition expenses could be at P1,500 per unit, or at least P22,500 to P31,000 per semester.

Micheas expects books, transportation, clothes, laptop and other expenses to add 80 percent of this cost. That means he needs more than P300,000 to finance his eldest son’s college education.

Challenging

Bankrolling their second son’s intellectual development will be much more challenging.

Jason Matthew is 9, now studying in a private school and wants to study at the Ateneo de Manila University. Historically, tuition fees outrun inflation at around 8-10 percent a year, especially for preschool, elementary and high school.

Micheas estimates that he needs to save at least P1.5 million to put his youngest son through college alone.

Fortunately, Micheas is also a life insurance agent in a multinational company and he knows his numbers. He plans to move his education money pot when it reaches P200,000 to a higher-yielding account, and supplement this with his investments in a single-pay variable life product sold by his company. Then he will look for more investment outlets.

All these financial maneuverings will not be successful if the entire family is not pushing together as a team, he says. To set aside P8,000 monthly, an amount that can already buy grocery items for one month for an average family of six, Micheas says the Dumlao family members had to change their lifestyle.

“Instead of Yellow Cab, we eat at Shakey’s and we don’t order drinks anymore. A P60 bottomless iced tea can already buy one siopao. You know, when I have to eat lunch in a mall, I buy my drinks inside the grocery,” he says.

When he has appointments in business centers in Metro Manila, Micheas says he has begun to plan carefully where to park his car. “You need to splash on a little bit of cologne before you go to your appointment, that’s true, but careful planning can save you quite a bit of money,” he says with a chuckle.

In the Filipino psyche, education is sacred. Parents will often singe their eyebrows to send their children to the best schools, and the Dumlao couple is no exemption. Micheas says they are also working on increasing their income, writing down their goals and making sure both couples are protected from sudden death or illnesses.

Investment tools used wisely

Marvin Fausto, senior vice president and chief investment officer at the Banco De Oro, says on top of more careful spending and saving regularly, Filipinos also need to learn how to use the right investment tools for the right purposes. You can’t expect to crack open coconut shells with a slender knife.

If you need the money for tuition in the next two to five years, the right approach would have been to move the money pot to money market funds and other conservative placements as the date for the need approached.

“Last year, I’ve seen a lot of people lose money in the market. They were lured by the historical high returns in the market from 2002 to 2007 that they forgot why they were in the market in the first place,” Marvin says.

Because too many investors were lulled into thinking the high returns would last forever, they gambled the money they would soon need, says Marvin.

“It is still true that mutual funds and UITFs are good long-term investments. But the right strategy would be to review your investment objectives and plans regularly. When the need is near, you move it to more appropriate investments. That’s the value of constant review,” he says.

Banco De Oro’s bond funds, for example, yielded 33 percent until 2008 since inception in April 2005. That’s still 11 percent per year, much higher than any time deposit return. Balanced funds gave 45-percent return since 2003.

“Equity funds are the ones that were really hit by the crisis at 4.5 percent since May 2005. You would have really lost money if you sold last year, but it also went as high as 100 percent in 2006 and if you took your money out that year, you would have doubled your investments,” he explains.

That’s the wisdom that comes from hindsight. Now, if you are already pinned down by the market turmoil, Marvin’s advice is to exhaust all other means to pay for tuition and other educational expenses, like getting subsidized student loans from schools, selling other assets like properties and earn additional income, paying monthly rather than annual installments.

“The worst time to sell is when the market is down. And that is now. If you have other means to get money for college education, do not sell your losing investments. Wait for them to recover,” he says.

Marvin expects the market to recover in two to three years. By then, he believes investments in equities, bonds and pooled funds to redeem their reputation.

“Attack your goals depending on the time frame when you need your money. If it’s a short-term need, put it in a money market fund in the biggest banks, so that even if the bank closes, the fund will still be there,” Marvin says.

(For more personal finance articles, visit MoneySmarts at http://blogs.inquirer.net/moneysmarts.)

By Ma. Salve Duplito
INQUIRER.net
First Posted 23:15:00 01/18/2009

Senate ratifies Magna Carta of Women

Posted in Women by Erineus on February 3, 2009

MANILA, Philippines—Senate on Monday approved on third and final reading a measure that seeks to protect the rights of Filipino women.

Eighteen senators voted to pass Senate Bill 2396, also known as the Magna Carta of Women.

Senator Maria Ana Consuelo Madrigal, head of the committee on youth, women and family relations, said the bill’s passage is in compliance with the county’s international obligation “to eliminate all forms of discrimination against women and to provide a comprehensive definition of discrimination against women in our national law.”

“This is a milestone legislation in defending the human rights of the poor women, who have no access to proper healthcare, of those who are marginalized and victims of discrimination and abuse,” Madrigal said in a statement.

She expressed hope that the measure would be signed into law in time for the celebration of Women’s Day on March 8.

“This is a very precious bill because it guarantees the basic rights if women and provides them with necessary protection against discrimination and abuse,” the senator further said.

By Maila Ager
INQUIRER.net
First Posted 23:14:00 02/02/2009

MOTHBALLED NUKE PLANT: Debate heats up anew over BNPP revival

Posted in BNPP, Congress, Energy, Legislation, Social Issues/Concerns by Erineus on February 3, 2009

MANILA, Philippines—The arguments had been heard before like a broken record.

They were raised again on Monday as Congress began debates on a bill that seeks to revive, at the cost of another $1 billion, the $2.3-billion Bataan Nuclear Power Plant (BNPP) mothballed over two decades ago.

First, said Albay Rep. Edcel Lagman and geologist Kelvin Rodolfo, comprehensive studies on the safety, technical and financial aspects of the plant should be made by the Philippine Institute of Volcanology and Seismology (Phivolcs).

They said at the hearing of the House committee on appropriations that the bill initiated by Pangasinan Rep. Mark Cojuangco was premature.

“There should be a study of the site, led by Phivolcs, a study by geologists with no conflict of interest,” said Rodolfo, a professor at University of Illinois and University of the Philippines.

Rodolfo said the location of the plant was “geologically dangerous.”

“Bataan and the entire Philippines are too tectonically and volcanically active,” he said.

He said the Phivolcs had not examined the safety of the region. He added that just because nothing happened to the plant during the powerful earthquake that hit Luzon in 1990 did not mean that the plant was safe, pointing out it was not operational at the time.

Rodolfo pointed out that the plant was close to Mt. Natib, a dormant volcano that has the possibility of erupting.

If proponents of the nuclear plant say the country is wrong to rely on Saudi oil, then it is also not right for the Philippines to rely on foreign sources for uranium, he said.

“There is only so much uranium in the world. It is depleted rapidly,” Rodolfo said.

Lagman said he had not seen a feasibility study on the project and suggested that the Cojuangco bill be transformed into one that would undertake a thorough review of the plant that would show that objections before could be surmounted.

Among those who countered Cojuangco’s proposals were Greenpeace, Freedom from Debt Coalition, Association of Major Religious Superiors of the Philippines, professor Giovanni Tapang and engineer Roberto Verzola.

Cost likely to go up

Etta Rosales of the Freedom from Debt Coalition questioned the projected $1-billion cost for the plant’s rehabilitation, saying the amount was likely to balloon to meet technical and safety demands, not to mention the costs of corruption.

Construction of the plant began in 1976, in the aftermath of the first Middle East oil embargo. The original cost was $500 million, but it ballooned to $2.3 billion by the time it was completed in 1984 under the regime of the dictator Ferdinand Marcos.

Following the ouster of Marcos in the 1986 People Power Revolution and apprehensions caused by the Chernobyl nuclear plant disaster in the Soviet Union in the spring of that year, the Corazon Aquino administration closed the plant. It also sued Westinghouse for overpricing and bribery, but a US court threw out the suit.

The debt on the plant, the country’s largest single obligation, was finally paid in April 2007, but the 620-megawatt facility with its nuclear reactor intact never generated a single watt of electricity. An earlier study revealed that the plant had over 2,000 defects.

Carlos Arcilla, a University of the Philippines professor and director of the National Institute of Geological Sciences, said that there had been no evidence in the past 20 years that there was a fault in the plant’s vicinity.

Not a nuclear bomb

“A nuclear plant is not a nuclear bomb. There’s no fear the nuclear plant will become a nuclear bomb,” Arcilla said.

Cojuangco argued that there was a pressing need to recommission the BNPP because of the looming power shortage by 2012 would result in 24-hour brownouts in Metro Manila and result in great economic dislocation.

Getting the BNPP up and running would also translate to lower power costs. At present, he said, the high price of electricity has been repelling investors.

As for the safety concerns, Cojuangco said that if the BNPP were rehabilitated to its original specifications, “it is a safe plant according to current international atomic standards of the power generating industry.”

Cojuangco said that South Korea and Japan had several power plants, and Japan had many fault lines at that. “If it’s OK in Japan, why would it not be OK in the Philippines?”

Ramon Pedrosa, chair emeritus of the Chamber of Commerce of the Philippines, said he regretted working for the shuttering of the BNPP and was now supporting its recommissioning.

“For 22 years, we’re paying the high price for not using the BNPP … let this be the start of a true sovereign energy program,” Pedrosa said.

‘Faulty economics’

Around 30 members of the environment group Greenpeace massed outside Congress carrying an 8-foot-tall tombstone on which was written “R.I.P. BNPP” and denouncing the project as “grotesquely expensive and based on faulty economics.”

Von Hernandez, Greenpeace Southeast Asia executive director, called the Cojuangco bill a “farce.”

Hernandez explained that the program may include the “possible commissioning of subsequent nuclear plants to justify the program’s existence. This presents a “greater and sustained drain on the country’s financial resources on top of the upfront cost of the BNPP rehabilitation itself.”

“The overwhelming safety and security reasons behind why the BNPP was mothballed remain just as valid and unassailable today. Our lawmakers should heed reason and let the BNPP rest in peace,” said Greenpeace campaigner Amalie Obusan.

In Balanga City, some 100 farmers, fishermen and students also marched Monday on the provincial capitol, demanding that Bataan officials reject the program. With reports from Amy R. Remo in Manila; and Tonette Orejas, Inquirer Central Luzon; Agence France-Presse

Billions for pork, zero for veterans

Posted in Budget, Congress, Legislation, Pork, Tax, Veterans Affairs by Erineus on February 3, 2009

The editorial “Everybody happy” (Philippine Daily Inquirer, 1/24/09) hit the proverbial nail on the head. Some segments of society are not really happy with how the lawmakers appropriated the P1.41-trillion national budget for 2009, especially because they voted for themselves a P9.665-billion pork barrel. While they tucked in another P35 billion for themselves, they did not bother to allocate the P2 billion promised by President Gloria Macapagal-Arroyo during her speeches at the 2006 and 2007 commemoration of the Araw ng Kagitingan at Mt. Samat, Bataan to World War II veterans, who are now in the twilight of their lives — some of them already bedridden.

Neither has Congress allocated the amount needed to adjust the veterans’ old-age pension from P5,000 to P10,000 per month to cushion the impact of the worst economic crisis; nor has it appropriated funds to the unfunded Republic Act 6948 as amended by another unfunded law, RA 7696, under which veterans and their wives are supposed to be entitled to an administrative disability pension of P1,700 and P500, respectively, per month upon reaching the age of 70. Most of them are now in their 80s and 90s and, needless to say, they need more maintenance medicines whose prices have been skyrocketing.

Yes, there is something that can be done to stop these lawmakers from their callous and heartless maneuverings for a “much bigger pork barrel and a bigger war chest for the 2010 elections.” Let’s replace the “trapos” [traditional politicos] among them with young and energetic Filipinos who have the ardent desire to help alleviate the sufferings of the poor in the countryside. Other sectors of society can do no less.

GODOFREDO O. PETEZA, post commander, Veterans Federation of the Philippines, Daet South-Imelda Veterans Post, Camarines Norte Veterans District, Daet

SC: Ban on ‘short time’ unconstitutional

Posted in Constitution, Constitutional Rights, Hotel, Judiciary, Jurisprudence, Laws, Legislation, LGUs by Erineus on February 1, 2009

MANILA, Philippines — The Supreme Court has declared unconstitutional a Manila ordinance banning “short time” admissions in motels, saying it violates the rights not only of motel owners but also of married couples.

The high court decision, penned by Associate Justice Dante Tinga, also overturned a Court of Appeals ruling that voided the original Manila regional trial court verdict that City Ordinance 7774 violated constitutional guarantees on personal liberty.

The appellate court had ruled that the ordinance was a valid exercise of the local government’s police powers.

In its ruling, the high court said even if the Manila City government’s claims that motels had become dens of “prostitution, adultery and fornication” were true, banning short time admissions would curtail “legitimate sexual behavior among consenting married or consenting single adults, which is constitutionality protected.”

It also said other legitimate activities, such as those of families seeking temporary comfort in case of power outages, travelers needing a place to wash up or rest in transit, or other persons or groups who merely need private space, would be curtailed.

The Supreme Court ruled on a case originally filed by the Malate Tourist and Development Corporation (MTDC), owner and operator of the Victoria Court chain, with the Manila regional trial court soon after the Manila ordinance was enacted in 1992.

The complainant was later joined by other motel operators White Light Corporation, Titanium Corporation and Sta. Mesa Tourist and Development Corporation (STDC).

By Tetch Torres
INQUIRER.net
First Posted 15:54:00 01/29/2009

Vetoing openness

Posted in Budget, Constitutional Rights, Editorial, Right To Information, Tax by Erineus on February 1, 2009

In the 2007 budget law, a right-to-information provision was vetoed by President Gloria Macapagal-Arroyo. (In 2008, the provision did not even find its way into the budget law.) In the P1.4-trillion General Appropriations Act of 2009 that the President is about to sign, the provision is back. Will the President veto it again?

Sen. Francis Pangilinan is right to sound the alarm. “Mindless of the numerous corruption scandals that rocked the nation last year, the Office of the President once again did not include the Right to Information section in its proposed 2009 P1.4-trillion budget. It is not clear whether this was devious desire or just an oversight,” he noted in a press statement. He said a people’s organization, Alyansa Agrikultura, had alerted him to it.

What does the section say?

“Right to Information. Subject to limitations as may be provided by law, the right of the people to information on matters of public concern, guaranteed under Section 7, Article III of the Constitution as well as with the state policy of full disclosure of all its transactions involving public interest, every government agency shall, upon request by any citizen, make available the data under their possession for information, scrutiny, copying, or reproduction of all records of information, in any form whatsoever, pertaining to the implementation of the appropriations under this Act including but not limited to information on projects, disbursement of funds, reports, contract bidding and awards.”

This is a tonic provision that can help restore public confidence in the political process. It is also, after the passed budget was amended to accommodate a P50-billion “economic stimulus package,” a necessary one. Requiring “every government agency” to “make available the data” a citizen may request “pertaining to the implementation of the appropriations under this Act” will help counter inordinate greed in government spending – or at least supply concerned citizens with the legal ammunition to fight corruption.

But President Arroyo vetoed a similar provision in the 2007 budget. She did not include the provision in the 2009 bill. Now that it has been inserted into the budget and actually passed, will she veto it again? We can think of only one reason she would do so: to protect the corrupt.

* * *

Denying transparency

The use of bicameral conference committees to forge a legislative measure acceptable to both the House and the Senate is a longstanding practice – and one that, as we and others have pointed out more than once, is prone to abuse. It has, all too often, given rise to the so-called third chamber of Congress, a shadow (and shadowy) branch of government. The way the “bicam” on the 2009 budget has conducted its business, however, occasions deeper worry; the concentration of power that we know is unhealthy for democracy has become even more acute.

The substance of the “economic stimulus package” that is a feature of the 2009 budget as finally approved is crucial, of course. A pro-administration congressman said of the P50-billion package: “This could be construed as a way to bankroll the political ambitions of some people.” Or the political interests of the administration.

But it is the way the administration engineered the passage of the budget that is gravely troubling.

Members of the bicameral conference committee had authorized Rep. Junie Cua, the chairman of the House appropriations committee, and Sen. Edgardo Angara, the chairman of the Senate finance committee, to meet over the holidays to thresh out the differences between the respective bills. The members were wrong to do this: to concentrate the power of the purse in only two pairs of hands.

But Cua and Angara did meet; they did the work of reconciling provisions and amending the budget – and they did not bother to report to their members afterwards.

“I cannot recall any similar occurrence in the past when this has happened,” House Deputy Minority Leader Ronaldo Zamora said. Oh, the bicam did meet, after the changes had been fixed. But only for 15 minutes. “This is farcical,” Zamora said.

That much is transparent.

Philippine Daily Inquirer
First Posted 23:23:00 01/29/2009