A mirage of an economic turnaround

After an absence of about three months, Bobi Tiglao was back at Edsa Plaza’s Tuesday Club last week. The waiters forgot who he was, despite his nightly TV appearances, and gave him a coffee mug marked "Guest". I called a waiter to complain and to ask him to look for Bobi’s personalized mug. "Sino ho siya, uli?" the waiter asked.

As presidential spokesmen go, Bobi’s pretty low key. I was surprised Sen. Ping Lacson singled him out as a key leftist in a high government position out to do the senator in. This particular morning, low key Bobi tried to sneak in the proposition that the country’s economy is in a turnaround mode. "It won’t be long now," he remarked, waiting for a confirmation from me.

I looked at Bobi and gave out a loud laugh, as if to say "You got to be joking." Actually, what I said was something like, "the former bureau manager of the Far Eastern Economic Review can’t really believe that." Bobi laughed, acknowledging my response.

Bobi’s wishful thinking is understandable. The political survival of the Arroyo government depends on a remarkable improvement of the economy happening soon. Or maybe, Bobi talked to the same foreign diplomat I had lunch with last week who reported a conversation with a friend of his whose business had to do with the moving in and out of expat furniture and stuff. The mover reports an increase in the number of expats moving into the country over expats moving out, for the first time in over a year. Even I had to concede that’s good news. Maybe things are inching up.

A snap of the fingers brings us back to reality. How can our economy be on a turnaround when we still don’t know for sure if the US economy has finally hit rock bottom and on a turnaround itself? Time magazine reports that "companies everywhere say the carnage will only get worse in the months to come. In places like the Philippines, where the unemployed frequently take to the streets, growing numbers of idle workers could become a serious threat to social stability."

For sure, we are in the same boat as the rest of our neighbors, including once mighty Taiwan and Singapore. "Exports account for more than 70 percent of Malaysia’s and Singapore’s GDPs, while the figure is around 50 percent in Taiwan, Thailand and the Philippines. The problem is, about half of those shipments go to the US, which is dealing with its own economic travails. American consumers and corporations just aren’t buying like they used to, and so Asia’s warehouses are overflowing with unsold goods."

And even if the US economy recovers soon, consumers and industries will have to be convinced they should junk their current computers and cell phones for new models. Individuals as well as businesses no longer feel the irrational urge to move up to new models for no good reason. And no amount of interest cuts by the Federal Reserve will make them buy computers they don’t need.

While waiting for the world economy to snap out of this awful economic mood, it will help Asian governments to reassess the weaknesses of their economies and strategize how they will meet the new challenges before them. They have to confront such issues as the emergence of China as the new economic super power. If they are not careful, foreign investments will migrate from Southeast Asia to China not only because of cheap labor and a large domestic market, but also because of China’s economically savvy political leadership.

Taxing OFWs

As expected, I got a lot of negative responses from our overseas readers regarding the proposal to revive the income tax on OFWs. I tried to respond to every e-mail I got that sounded reasonable and I am happy to note that many wrote back to acknowledge my explanation.

There are those however, who took to name calling and basically just conveyed their unprintable remarks. While those are understandable and well taken too, I just wonder why some of us do not seem to have the ability to engage in a civilized discussion of issues purely on the merits. We could disagree in the end, without being disagreeable.

Most brought up the fact that many OFWs aren’t making that much, even in dollar terms. Which is why we did say the proposal exempts these OFWs. But it just isn’t fair for a highly paid Pinoy expat working in a multinational to pay absolutely no income tax while a lowly clerk working in an office in Makati pays some income tax on his barely above minimum wage in devalued pesos.

Anyway, we also received encouraging e-mails. This one’s from "WT".

I would just like to congratulate you on your column – I never read your column before up until you came up with your suggestion about taxing the OFWs. Being an OFW myself, I felt offended by your column. But I kept my mind open and it seems that you have a point. The tax that the people pay keeps the government running. It’s the democratic way of maintaining a civilized environment.

I like your analogy on how our system works (apartment complex). It’s quite true that they behave the same way; there are some apartment complex that are more expensive than others but they provide more luxury to their tenants – similar to how other nations provide more luxuries to their citizens in exchange of higher taxes.

I guess I’m just naive. I share the same sentiments other Filipinos have against our government – I don’t trust them. I’ve heard from the Filipino news yesterday that 30 percent of the tax collected goes to corrupt officials – this is one of the reasons that I don’t trust our government.

I guess these kinds of things happen to other countries as well, but this is not the point. I would just like to suggest that we should automate the process of handling the government’s financial resources and making most, if not all, transactions transparent to the public. The process of automation requires a lot of money and I guess that’s one reason why the government should increase their tax collection.

I suggest that they should start with small projects that can be developed at a small amount of time – considering that these projects would be part of a bigger project. Its like a jigsaw puzzle; it seems to be difficult finishing the whole jigsaw in a single day, it would be better if you finish small parts of it one day at a time – this would be more effective. I also suggest that they should look for local businesses that would be able to make these things possible.

Thanks and more power to your column.

A riddle

Here’s a riddle from Dr. Ernie E. for all you corporate guys out there.

Question: What is the only activity where you start at the top and work your way to the bottom, while getting a raise.

Answer: Sex (Boo Chanco’s e-mail address is [email protected])