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Philippine Business Magazine: Volume 12 No. 8  - Updates

RP HUMAN DEVELOPMENT REPORT
Down the Development Ladder

The face of poverty

The Human Development Index, which was introduced by the United Nations Development Programme in 1990, is a measure of a country’s overall achievement in the basic dimensions of human development. It looks not only at income but also at education and longevity of life. Income or standard of living is measured by per capita income, education by enrollment ratio, and longevity by life expectancy. The higher a country’s HDI score, the better its performance. The HDI is also used as an indicator to find out how well countries rank against each other in terms of providing its citizens a good quality of life.

A local group, the Philippine Development Network, has adopted the HDI methodology and applied it to the Philippines’ 77 provinces. In the Philippine Human Development Report 2005, Benguet emerged as the province with the highest HDI score, followed by Laguna, Batanes, Rizal, and Cavite. It was no coincidence that provinces near Metro Manila had higher HDI scores since these benefit from the spillover of economic activity in the metropolis. Meanwhile, the five provinces with the lowest scores are Masbate and four provinces from the Autonomous Region of Muslim Mindanao—Sulu, Maguindanao, Tawi-Tawi, and Basilan.

Aside from the HDI, the UNDP has also developed the Human Poverty Index. In contrast to the HDI, the HPI measures poverty in terms of deprivation from access to water, from surviving until age 40, and from basic literacy. A high HPI score indicates a higher level of poverty. It is also a good gauge of how countries’ or provinces’ efforts toward poverty eradication compare against each other.

The report revealed that in the Philippines, the five least impoverished provinces are all in Luzon, while four of the five poorest provinces are in Mindanao and the fifth is Masbate.

ENERGY CONSERVATION
Operation Lights Out

In a desire to cut costs, President Gloria Macapagal-Arroyo issued Administrative Order 126 on 13 August, requiring all government agencies to adopt energy conservation measures. The measures include the regulation of the use of air-conditioning in government offices and a ban on the use of the almost 30,000 government motor vehicles nationwide during weekends. Government vehicles also have to start using more of the alternative fuels, such as coco methyl ester–blended diesel, ethanol-blended gas, and autogas.

To ensure compliance, an energy audit team headed by Energy Undersecretary Peter Abaya and Senior Deputy Executive Secretary Waldo Flores was tasked to conduct spot-checks in all government agencies and offices. “Enercops” or energy conservation police from the Department of Energy started conducting random office visits in September, after which they graded the offices and gave recommendations to the heads. For instance, in September, the Philippine Economic Zone Authority got a rating of 95%, while the Development Bank of the Philippines got 90%.

Meanwhile, the Bioethanol Fuel Act of 2005 has been approved by the House of Representatives and transmitted to the Senate. Once passed as a law, the government foresees huge investments going to the building of ethanol plants in the country. Blending ethanol—the world’s leading alternative liquid fuel produced by the biological fermentation of carbohydrates derived from plant material—with gasoline or diesel has been proven to increase mileage and reduce harmful emissions of vehicles.

 Signals

The fiscal shortfall of the national government narrowed by 21.8% to P115.5 billion in the first 10 months from P147.7 billion a year ago. Revenues rose 14.6% to P661.2 billion from P577.0 billion a year ago. On the other hand, expenditures increased 7.2% to P776.7 billion from P724.7 billion. In the same period, the primary surplus (revenues less expenditures net of interest payments) expanded 91.8% to P151.4 billion from P78.9 billion.

The country’s headline inflation rate remained at a 13-month low of 7.0% in October. At the same time, the core inflation rate fell to a 15-month low of 6.3%. Inflation for food, beverages, and tobacco rose to 5.9% in October from 5.6% in September, while inflation for nonfood items dipped slightly to a 12-month low of 8.1%.

Net foreign portfolio investments rose 706.6% to US$2.0 billion in the first 10 months from US$253.8 million a year ago. Foreign investments inflows increased 201.7% to US$5.0 billion from US$1.6 billion, while foreign investments outflows grew 109.6% to US$2.9 billion from US$1.4 billion.

Continued demand for Filipino workers abroad drove overseas remittances higher by 28.0% to US$7.9 billion in the first 9 months from US$6.2 billion a year ago. Inflows from sea-based workers grew 14.3% to US$1.2 billion from US$1.1 billion. Income from land-based OFWs increased 30.9% to US$6.7 billion from US$5.1 billion. Almost 62.0% of remittances came from the U.S.

Export earnings in September dropped 1.2% to US$3.6 billion from US$3.6 billion a year ago as the drop in demand for electronic products continued to affect the country’s export performance. Decreases were observed in six electronic groups, with telecommunications contributing the biggest negative growth.

Commercial bank lending grew slower in September at 0.5% from 3.3% in August. Loans to the following sectors pulled down growth in overall lending: wholesale and retail trade; manufacturing; construction; transportation, storage, and communication; electricity, gas, and water; and mining and quarrying. The decelerating trend in growth of outstanding loans is partly attributed by the Bangko Sentral to banks’ unloading of nonperforming loans through the Special Purpose Vehicle Law.

 

 

 

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