IN FOCUS: Services Sector

PIDS Book 2014-03: PJEPA: Strengthening the Foundation for Regional Cooperation and Economic Integration, Vol. II
by Erlinda M. Medalla

This two-volume publication of the Philippine Institute for Development Studies (PIDS) and the Philippine APEC Study Center Network (PASCN) is composed of 17 studies that assess the potential impact of the Philippines-Japan Economic Partnership Agreement (PJEPA) on the Philippine macroeconomy and key sectors, which include agriculture, manufacturing and trade, small and medium enterprises, and tourism. Jointly conducted in 2003 by the PIDS, PASCN, and the Department of Trade and Industry, these studies aided Philippine representatives during the negotiations for the agreement with Japan from 2004 to 2006.

The PJEPA was ratified on October 8, 2008 after two years of Senate hearings. The studies in this book helped pave the way for the ratification of the PJEPA (then JPEPA) as these were cited and used as arguments on how the country could benefit from the agreement. Volume II contains papers that present impact analyses on specific sectors and concerns, and how the agreement will affect the domestic economy. This volume also identifies which sectors will benefit from and will be disadvantaged by an economic partnership with Japan. Click here for the full article.

PJD 2012 Vol. 39 Nos. 1-2: PJD 2012 Special Volume on ASEAN Economic Community - Introduction
by Rafaelita M. Aldaba

This special volume of the Philippine Journal of Development (PJD) is devoted to discussions and analyses of issues on the implementation of the ASEAN Economic Community (AEC) 2015 blueprint. Except for the services liberalization paper, all the papers were carried out under the AEC Scorecard Project of the Philippine Institute for Development Studies and the Economic Research Institute for ASEAN and East Asia. The project sought to assess the status of Philippine commitments, understand the factors affecting the AEC implementation, and improve the AEC Scorecard. Primary data gathering was conducted through perception surveys, interviews, and focus group discussions among various stakeholders from the government, industry, academe, and civil society groups. The respondents were carefully selected as their responses formed the basis of case studies presented in the papers. The analyses were supplemented with secondary data and existing literature on the core AEC issues.

The reports covered trade liberalization, trade facilitation, agriculture, investment facilitation and promotion, services liberalization and the need for capacity building, movement of professional workers, and logistics and transport connectivity. They examined the issues and implications arising from liberalization and crafted measures on the way forward and how the government can facilitate the implementation of the AEC agreements taking into account the country`s own domestic development aspirations and industrial strategy. Click here for the full article.

PN 2014-10: Competition in the Rice Value Chain: Highlights of a Rapid Appraisal
by Beulah Dela Peña

This Policy Note discusses the rice value chain and how the policy on restricting rice imports impacts the various stakeholders in the chain. It is based on a rapid appraisal of the rice value chain conducted through interviews in October 2013. Key informants came from the National Food Authority and each of the nodes of the rice supply chain from the producing, trading, and milling markets in Nueva Ecija and Pangasinan to the milling and wholesale markets in Bulacan, and the wholesale and retail markets in Manila. The rapid appraisal was carried out as part of the project "Competition Reforms in Key Markets for Enhancing Social and Economic Welfare in Developing Countries", a collaborative undertaking of the Consumer Unity and Trust Society (CUTS) International, PIDS, and Action for Economic Reforms. The project aims to demonstrate the benefits of competition reforms for consumers and producers and generate support from policymakers in developing countries. Click here for the full article.

PN 2014-09: Linking Small Farmers to Modern Markets: The Role of Contract Farming
by Roehlano M. Briones and Ivory Myka R. Galang

This Policy Note summarizes a study by Roehlano Briones titled "Small farmers in high-value chains: Binding or relaxing constraints to inclusive growth?", which seeks to assess the impact of contract farming on small farmers in the Philippines using evidence-based methods. Specifically, the study aims to characterize contract farming for a major value chain in Philippine agriculture, determine the impact of contract farming on the farm incomes of smallholders, and assess the degree to which participation in contract farming is biased toward farmers with larger endowments. Click here for the full article.

DP 2014-29: Review and Assessment of Programs Offered by State Universities and Colleges
by Rosario G. Manasan and Danileen Kristel Parel

The importance of tertiary education in promoting human development and improving the economy`s competitiveness has already been realized. However, state universities and colleges (SUCs) have always faced issues such as the quality of education, management and financial systems, and access, despite considerable funding support provided by the government. This study, which is an extension of a previous work to include all SUCs in the Philippines, aims to (i) review and assess the programs being offered by SUCs vis-a-vis their mandates, the courses being offered by other SUCs in the region, and the quality of graduates produced; and (ii) recommend courses of action to improve the relevance and quality of course offerings of the SUCs.

A review of the mandates of the SUCs in the Philippines indicates that the mandates of a number of SUCs are fairly broad to start with. Beyond this, the charters of most SUCs allow them to offer programs outside of their core mandates. Given the broad mandates of SUCs, it is not surprising that there is substantial duplication in their program offerings relative to those of private higher education institutions (PHEIs) and other SUCs in the same region where they operate. Click here for the full article.

DP 2014-28: Study of Government Interventions for Employment Generation in the Private Sector
by Danilo C. Israel and Marife M. Ballesteros

Economic growth in the Philippines has not been accompanied by significant improvements in employment. Government thus implemented Active Labor Market Programs or ALMPs as one of the strategies to improve the chances of getting jobs of those in disadvantaged sectors. The programs specifically targeted skilled, semi-skilled, and low-skilled workers in the community through the infrastructure and non-infrastructure projects of national government agencies, local government units, government-owned and -controlled corporations, government financial institutions, and public-private partnerships in the national, regional, provincial, city, and municipal levels. Overall, ALMPs have been primarily adopted as stop-gap measures to address adverse effects of economic crises on employment.

The employment performance of these programs appears transitory and short term. Although some programs exceeded the employment targets, it is not clear how these numbers are translated at the macro level. The programs are apparently intended to address other social issues such as poverty and social/human development or community development rather than making an impact on net employment. These inferences however need to be validated through in-depth impact analysis of specific programs, which was not possible under this study. To provide effective evaluation of these studies, there is a need to create convergence and agreements among key departments as regards the methodology and definitions in identifying and counting of jobs. The absence of a central monitoring and evaluation office in each department has also created difficulty in identifying and integrating information and data. Click here for the full article.

DP 2014-27: Quick Response Funds and DRRM Resources in the Department of National Defense and Various Departments
by Sonny N. Domingo

The study assesses the process of quick response fund (QRF) allocation, administration, and implementation under the various executive departments with cognizance of national disaster risk reduction management (DRRM) imperatives. It further touches on the inventory of the line agencies` available assets for disaster response and rehabilitation. It also looks into administration details that make up the processes of program planning, fund availment, and control within the departments of National Defense, Social Welfare, Public Works, Education, and Agriculture as well as how DRRM resources have complemented each other. Key indicators were examined and appropriation levels were analyzed to see whether the resources aid in the provision of an applicable response in the face of calamities/disasters. Trends in the QRF utilization of three departments up to fiscal year 2013 suggest the necessity of increasing the current level of standby funds for disaster response. Issues on fund control, monitoring and absorption, and sufficiency of DRRM-related assets point to entry points for structural and policy augmentations. The level of standby resources for DRR and the machinations underlying their deployment determine the timely delivery of appropriate support and services to affected communities in times of disaster. Click here for the full article.

DP 2014-26: Purchase or Lease of All-Purpose Vehicles for Government Offices
by Department of Budget and Management

This article compares the costs and benefits for the government of leasing vis-a-vis outright purchase of motor vehicles. It presents two methods through which public managers can estimate and assess the value of procuring motor vehicles either under lease payment or direct purchase. Using data from selected government agencies, the net present values generated suggest that outright purchase of low-end vehicles is preferable to leasing. For high-end models, leasing offers a more practical option. The findings, however, are far from conclusive because assumptions regarding the variables and input data are subject to change. Results can be significantly improved with better and more accurate statistics. To gain sufficient understanding of the issue, factors other than those covered by the study, i.e., economies of scale and entry of commercial banks, must also be explored. Click here for the full article.

DP 2014-25: Rapid Appraisal of the State of Competition in the Rice Value Chain
by Beulah Dela Peña

The rapid appraisal is based on the interview of select players in various levels of the palay/rice value chain from Pangasinan and Nueva Ecija to Metro Manila. It finds that the paddy and rice supply chain is multilayered with many competing players in each layer, and with no evidence of any cartel-like behavior in the areas studied. Margins are limited to 2 percent or less of raw materials at all levels before retail. Profits are enhanced by volume, fast turnover of stocks, integration of operations across levels, and investments for quality consistency. The greatest threats to current players are weather risks and continuing tight local paddy supplies that spawn greater competition and increase management costs. The increased costs also highlight the lower cost option of bringing in foreign rice, which, given government quantitative restrictions on rice imports, manifests in rampant smuggling. Click here for the full article.

DP 2014-24: Comparing the 1999 and 2007 Philippine NTA Estimates and Examining the Effects of a Definitional Change of Overseas Workers' Remittances
by Michael R.M. Abrigo, and J.M. Ian Salas.

This paper compares the estimates of the 1999 and 2007 Philippine National Transfer Accounts (NTA) and examines the implications of using two alternative treatments or definitions of overseas Filipino workers` (OFW) remittances in the NTA. To reflect official definitions in the Philippine System of National Accounts, the treatment of OFW remittances in the estimation is changed from being mainly interhousehold transfers in previous NTA estimates to being mainly labor income (earnings) in the revised NTA estimates. This results in a downward revision in lifecycle deficit estimates for 1999 and 2007, highlighting the sensitivity of estimates to definitional changes. Click here for the full article.

PHL can be Asia's valuable brand in services trade

The Philippines has vast potentials to be the heart of services trade in Asia Pacific.

A study authored by Dr. Ramonette Serafica, research consultant of state think tank Philippine Institute for Development Studies (PIDS), underscores the vast opportunities left untapped in the services sector.

The services sector has significantly contributed to the Philippine economy in increasing employment, investment, and revenue generation. It represents 44.15 percent of gross exports in terms of service value added, Serafica said. "However, there are still vast opportunities left untapped to fully exploit its role in the economy. Read more

Philippine economy to benefit from EU recovery

Recovery in the European Union (EU) will boost the Philippine economy given strong trade and investment relations between the two.

In a recent forum organized by state think tank Philippine Institute for Development Studies (PIDS), Prof. Lino Briguglio of the Department of Economics, University of Malta, noted that "economic conditions in the EU are likely to have an effect on the Philippine economy, given that the EU is an important trade partner and a major FDI (foreign direct investment) contributor."

The Philippines enjoys a trade surplus with the EU, he said. Total EU FDI stock reached just under EUR8 billion in 2011, making the bloc the largest investment partner of the Philippines. EU FDI accounted for about 30 percent of the Philippines' FDI stock, Briguglio said. Read more

Rice price spike last year due to low imports

Blaming rice cartels for price manipulation cannot be considered a definitive explanation of last year's rice price hike. The sharp drop in imports is a more logical and evidence-based explanation, according to a study by state think tank Philippine Institute for Development Studies (PIDS).

Written by Dr. Roehlano Briones, PIDS senior research fellow, and Ivory Myka Galang, PIDS research analyst, the paper cited the inadequacy of supply starting in mid-2013 due to the reduction in imports as the main cause of the rice price spike.

The retail price of rice shot up to PHP36.28 in December 2013 from PHP32.37 in June 2013 -- 12-percent increase in just six months. Read more