Global Financial Crisis and MSMEs



  Finding Alternatives and Solutions to the Impacts of the Global Economic Crisis   

  Nations are confronted with two of the most significant crisis of its time: the climate crisis and the global  economic crisis. The climate crisis no doubt is a result of unprecedented, unsustainable growth and  development without regard of the cost to people and to the environment. The recent meltdown  among economic giants only underscores the needed shift in focus among societies over the  predominant economic paradigms. There is apparent call towards enhanced institutional governance,  greater participation of people and democratized access to resources.    Micro, small and medium enterprises (MSMEs) constitutes 99.7% of business firms in the Philippines. It  contributes 32% to total Gross Domestic Product and generates 70% of all employment. No doubt,  MSMEs are a potent force for sustainable development that stimulates local economy development and  a potential mechanism for improving social equity among the poor. However, the present global  economic crisis poses grave threat to their growth and survival considering the already many and  multiple challenges inherent among MSMEs.    The Philippines remains unclear in terms of what actions to take to mitigate the effects of the crisis.  Ongoing discourses are happening among various groups and civil society stakeholders to find  alternatives to the crisis confronted. FSSI working primarily with MSMEs and in the forefront of  advocating and promoting the triple bottom‐line (3BL) framework as the basis for enterprise  development deems it relevant and strategic to provide opportunities for such discussion.   

  Through FSSI’s advocacy program, it is aimed that this proposed public forum will:     Facilitate discourse and exchange among various stakeholders (CSOs, private sector,  government) in finding solutions and alternatives to mitigate the impacts of the crisis;   Identify practical (short‐term) and strategic (long‐term) solutions that can be pursued among  the relevant stakeholders present;   Contribute to on‐going initiatives of finding alternatives and solutions to the impacts of the  global economic crisis                     

                The Freedom from Debt Coalition (FDC) –  Philippines is a nationwide multi‐sectoral  coalition conducting advocacy work in the  national, local and international arenas, to realize  a common framework and agenda for economic  development.      Mindanao Alliance of Self Help Societies‐Southern  Philippines Educational Cooperative Center (MASS‐ SPECC) is the oldest cooperative federation in the  country and consists of 252 cooperatives and  other self‐help groups operating in 20 out of 23  provinces in Mindanao.      The Cagayan de Oro Chamber of Commerce and  Industry Foundation, Inc. (Oro Chamber) is a non‐ stock and non‐profit voluntary organization of  businessmen and professionals working together  to foster and promote private sector initiative  toward business development in Cagayan de Oro  City, Misamis Oriental Province and nearby areas.                                                           






                                                            MEDIA  Sunstar CDO, Mindanao Gold Star Daily ABS‐CBN, CRA,  The Mindanao Current, Bombo Radyo, TV 39  7   PER INDIVIDUAL COUNT  PER ORGANIZATION  MEMBERS  CONVERGENCE, Helvetas, PHILSSA, FDC, PHILNET‐RDI,  PCF OR VCF, MINCODE, MASS‐SPECC, APPEND, NCSD,  NCCP, FPSDC, HEKS, SMPFC   Green Forum Philippines, NATTCCO, WAND, CBCP‐NASSA   PARTNERS  MILAMDEC Foundation, MILAMDE Ccooperative,  Greenminds, Coop Bank of Misamis Oriental, MMASON,  CDO handmade , PDAP, Oro Chamber, Bukidnon  Muscovado                                                                                                  OTHER STAKEHOLDERS  VJandep Bakeshop, Philippine National Bank, Boom  Marine Corp, Don2 GNC and Pharmacy, Oro Integrated  Coop, Al Rose Group of Companies, KAANIIS, BMC‐SVC,  NEDA, Department of Finance, BOPC, Kpmpi‐bmfi, IBON,  Ateneo, Salay Handmade  76  10 –  FSSI staff  39  18 




    Program / Format   Maayong Adlaw! Mindanao!,  Local Tv 39    DXCO, Radio Asenso   ABS CBN TV, Northern  Mindanao   Sunstar Cdo   Investing In People   Best Expo ’09 Seen To  Bring In New Money   Philippine Information Agency  Best Expo ’09 Seen To  Bring In New Money   Bombo Radyo   Guest / Topic   Milo Tanchuling   Date  May 26 – Main News  May 27 – Live Intervidw  May 28 – Forum Coverage   May 28   May 30   May 29  May 14  

Milo Tanchuling   Milo Tanchuling  Datu Makadinding   Salay Handmade,   Oro Chamber, FSSI, FDC,  MASS‐SPECC   Oro Chamber, Fssi, Fdc,  Mass‐Specc   Milo Tanchuling  

May 13  

May 28* ‐ Recorded Interview  


In Collaboration with:

Finding Alternatives to the Impact of the Global Financial Crisis
A Public Forum May 28, 2009 Casa Real Function Hall, VIP Hotel
Don A. Velez St., Cagayan de Oro City (08822) 726-080

TIME 08:00- 09:00 am 09:00–09:30 am

ACTIVITY REGISTRATION Opening Ceremony/Forum Introduction Welcome Remarks Mercedes Castillo Chairperson, Committee on Education & Advocacy BOT member, FSSI


PANEL 1: Understanding the Impacts of the Crisis
09:30-09:55am PRESENTATION 1: The Global Economic Crisis: Asian Context and Perspective Joseph Lim, Economist, Ateneo de Manila University PRESENTATION 2: The Global Economic Crisis: Assessment & Response of the National Government Dir. Dennis Arroyo, NEDA National Planning & Policy Staff




OPEN FORUM FORUM/COFFEE BREAK PRESENTATION 3: The Global Economic Crisis: A Perspective from Civil Society Sector Rosario Bella Guzman, IBON, Executive Director PRESENTATION 4: Challenges in MSME Development in a Global Economic Crisis Situation Clarence Pascual Labor Economist Pascual, OPEN FORUM LUNCH BREAK


11:00-12:00nn 12:00–01:30 pm

In Collaboration with:

TIME 01:30-02:20pm

ACTIVITY PANEL 2: SHARING OF LOCAL EXPERIENCES PRESENTATION 5: Community Experiences: Sailing Through Rough : Times Jing Pacturan, PDAP Executive Director PRESENTATION 6: LGU Initiatives: Local Response to Global Economic Challenges Mayor Lawrence Cruz (for confirmation) City Mayor, Iligan City PRESENTATION 7: MSME Sector: Surviving in a Period of Crisis : Loreta Rafisura, Salay Handmade Paper PRESENTATION 8: Cooperatives Amidst Economic Crisis Lydia Canalija, LIPI Employees MPC, Manager



PRESENTATION 9: Finding Alternatives and Solutions Milo Tanchuling Secretary-General, Freedom from Debt Coalition (FDC) Secretary PANEL 3: STAKEHOLDER REACTIONS     From the Government Government:




Dir. Alicia Eusenia, DTI Regional Director

From the Cooperative Sector o Sylvia O. Paraguya, MASS-SPECC Executive Director SPECC From the Women Sector o Dina Anitan, WAND Mindanao Coordinator From the Private Sector o Ricardo Meñes, President, Oro Chamber of Commerce & Industry Foundation

03:40-04:15 pm 04:15-05:00 pm

OPEN FORUM/COFFEE BREAK SYNTHESIS/WRAP-UP SYNTHESIS/WRAP CLOSING REMARKS Ricardo Meñes President, Oro Chamber of Commerce & Industry Foundation

Joseph Y. Lim
The Global Economic Crisis: Asian Context and Perspective

Lim has taught in the University of the Philippines School of Economics for 20 years before joining the Ateneo de Manila Univer‐ sity Department of Economics. Lim has numerous publications on the Asian financial crisis and is currently writing a study on the  current financial crisis. Lim’s most recent research topics include international finance, structural adjustments, international la‐ bor standards and poverty reduction. Several of these works were published in conjunction with the UNDP Macroeconomics for  Poverty Reduction.  

Hard Landing to Global Imbalances in the pre-2007 period

The Current Global Financial Crisis
Presentation by:

• Latest US boom in 2004-7 spurred by consumption and housing boom as US g g household savings was negative and the spending financed by debts and loans

Joseph Anthony Lim
Economist Ateneo de Manila University

Hard Landing to Global Imbalances in the pre-2007 period • The resulting large US current account and fiscal deficits were being financed by countries with large current account surpluses – the export-oriented economies -especially PRC, Japan, the other East Asian emerging markets and the oil-producing countries (notably Russia)

Global imbalances 2003-2007


Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Current Account vs Financial/Capital Accounts, billions &S$
1000.0 800.0 600.0 400.0 200.0 0.0 -200.0 -400.0 -600.0 -800.0 -1000.0

Capital & Financial Accounts and Errors Current Account,

• US CA deficit is completely offset by net capital inflows to the US. Capital inflows to US from
– private capital flows from other countries – central banks’ investment in US securities from international reserves of other countries – most of net inflows to US in recent years go to debt securities (T-bills and bonds)

• But situation could not be sustained

The Current Global and Economic Crisis: The Western Countries
• Roots of the crisis:
– the high leveraging in the US during the growth period 2004 to 2007 – the subsequent asset price bubbles and bursting of the bubbles – the subprime lending and securitization of mortgage and other loan assets – The spread of the leveraging, asset bubble and securitization of loan assets to Europe and other Western developed countries

Origins of the US Subprime Crisis
• The rise of the securitization of loan assets, especially housing mortgages, in the 1990s and intensifying in the 2000s and the latest boom period in the US (2004-7) • The dot-com bubble bursting in 2001 caused authorities to reduce Fed policy rates from 6.5% in 2000 to 1% by 2003. Together with tax cuts by the Bush Administration, this led to a consumption boom in 2003 to 2007 and large and widespread household investments in housing through mortgage loans

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Origins of the US Subprime Crisis (cont.)
• Fannie Mae and Freddie Mac – two government-sponsored enterprises -- were given incentives to securitize mortgages and make housing affordable and gear a sizeable portion of the mortgages to low-income households • The lax monetary and fiscal policies enticed households, financial institutions and firms into high leveraging (debtfinancing), especially in the housing market • The bad practices were given much incentives by low interest rates, skyrocketing housing prices and ‘irrational exuberance’ and were largely unregulated

Origins of the US Subprime Crisis (cont.)
• Loan assets were highly securitized into mortgage-backed securities (MBS) and credit debt obligations (CDOs) • These securities were insured by financial instruments issued by private financial institutions (like AIG) known as credit default swaps (CDS) • Housing loans were given without much credit investigation by the mortgage underwriters to borrowers that were in the past shut out from the mortgage market because of their higher risks of default (this is the subprime sector).

Origins of the US Subprime Crisis (cont.)
• Sweeteners were given for mortgage debtors to purchase houses (interest rate payments only in initial periods, a low 4% interest rate in initial years, with rates increasing significantly after, etc.)

The securitization of loan assets especially mortgage loans

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Dangers in the 2003-2007 US Housing Boom
• Lenders and mortgage brokers cut off from the borrower, who pays to the servicer • The issuer of the mortgage-backed securities (MBS) or CDO (investment banks, Fannie Mae/Freddie Mac) pools different types of loan assets into one financial instrument package – product not clear and transparent • Rating agencies rated these securities very highly disregarding the risks and concentrating on high prices of real property used as collateral

Dangers in the 2003-2007 US Housing Boom
• The whole process was leveraged with buyers of the securities highly leveraged and commercial banks and investment banks borrowing to buy these securities • M Many b borrowed short t d h t term and i d invested i securities th t are t d in iti that based on long-term loan (mortgage) assets – term mismatch • These dangerous activities were largely unregulated by the Securities and Exchange Commission (in charge of investment houses) and the Fed was lax with the commercial banks.

The bursting of the asset bubble, defaults and financial chaos
• Rising inflation (partly caused by high fuel costs, partly by high spending) made the US Fed increase the policy rates from 1% to 5.25% between 2004 to 2006 • Rising interest rates directly affected capacity to pay of borrowers • Together with indiscriminate mortgage lending, this led to high defaults in the subprime housing market, starting late 2006 and intensifying in 2007 leading to crisis proportions in 2008 • Bursting of asset bubbles – collapse of housing prices and stock market prices in 2007 and 2008 onwards

The bursting of the asset bubble, defaults and financial chaos
• Financial trouble hit all the investment banks and many commercial banks, insurance companies and other financial institutions • Securitization of the loan assets made the crisis deeper with problems of transparency and valuation of the securities • Starting September 2008: Bankruptcy of Lehman Bros, takeover of Merrill Lynch and Bear Sterns, bailout of AIG, Citigroup, Bank of America shakes confidence; Stock markets worldwide collapse: Beginning of ‘depression’ mentality worldwide – stock market collapse

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


There is the question of how problems in one small corner of US financial markets (the subprime mortgage market) could affect financial markets so powerfully (this slide borrowed from Barry Eichengreen)
• Recall that subprime mortgages accounted for only 3 per cent of US financial assets on the eve of the crisis (hence even a smaller share of global financial assets).

There is the question of how problems in one small corner of US financial markets (the subprime mortgage market) could affect financial markets so powerfully (this slide borrowed from Barry Eichengreen) • Part of the answer is asymmetric information.
– This was the fear that similar problems lurked in other asset classes, p precipitating p p g panicked selloffs.

• Part of the answer is leverage.
– Many of those who held subprime-related assets were leveraged 12 to 50 times (12 for commercial banks, 25 times for investment banks, 50 times for certain now-notorious broker-dealers). – $1 of subprime related losses thus forced $12 to $50 of other assets to be liquidated.

• Part of the answer is counterparty risk.
– The failure of certain counterparties (can you say “Lehman Bros.?”) led to illiquidity and losses for other investors, creating a domino effect. – These propagation mechanisms will be studied for years...


Globalization: finance → trade
Figure 1 Finance driven globalization
180 350

The Deepening and Spreading of the US Financial Crisis to the Real Sector
• The financial crisis led to strong credit squeeze as banks refused to lend to borrowers and to other banks; interbank rates increased sharply in September-November 2008.
As percent of GDP, indices 19 980=100

160 300 140 250 120 200


• L Losses i b i in business confidence among l d fid lenders, i investors and t d finally consumers cut their spending significantly. • Consumers were badly affected by sharp declines in wealth – collapse in housing prices, stock prices, pension fund payments and credit squeeze. Retail sales plummeted.



60 100 40 50 20

0 1980 1990 1995 Years Global financial assets Global financial assets as a percentage of GDP (right axis) Global merchandise trade Global merchandise trade as a percentage of GDP (right axis) 2000 2006



Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


The Deepening and Spreading of the US Financial Crisis to the Real Sector
• Firms’ earnings suffered from sharp drop in sales. Many firms teetered on collapse (e.g. the auto industry) • Firms laid off workers increasingly leading to a vicious downward spiral of unemployment, f th consumption cuts, d d i l f l t further ti t further firm losses, further layoffs, possible loan defaults of firms and households (credit card defaults), further cuts in lending, etc.

The Deepening and Spreading of the US Financial Crisis to the Global Economies
• European, Australian/NZ financial institutions participated in the US subprime lending and had their own credit-led growth and asset bubbles in their respective countries. They were infected by the US financial and economic crisis in the US. • US, Europe and Japan now in deep recession. US GDP contracted more than 6.5% in last quarter of 2008, another 6.1% 1st quarter of 2009. Economists officially declared US in recession since December 2007. • Iceland suffered financial, economic and currency collapse and had to ask for IMF help

The Deepening and Spreading of the US Financial Crisis to the Global Economies
• Hungary, Ukraine, Serbia and Pakistan also had to run to IMF for foreign exchange funds as massive foreign capital outflows in emerging markets led to liquidity shortages in foreign reserves and sharp currency depreciation – both contributing to near-debt-defaults • Russia also in a serious crisis due to massive capital outflows, oil price decline and sharp and continuing depreciation of the ruble • Asian NIEs registered negative growth starting 2008 3rd quarter of

Market Failures
• Contrary to the pronouncements of the institutions of the Washington Consensus – IMF and US – trade and financial liberalization globally carries tremendous risks – through market failures • In the last two decades, economists have pinpointed market failures ( (as opposed to market efficiencies) in g ) goods, labor and capital markets – this global ‘depression’ shows the failure in all three sectors. • Perhaps the biggest market failures are in the financial markets – Moral hazards and adverse selection (You don’t know whether borrower will pay back, low interest rates attract ‘good’ and ‘bad’ borrowers, when interest rate goes up, ‘good’ borrowers become ‘bad’, and you attract ‘bad’ borrowers)

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Market Failures
• Perhaps the biggest market failures are in the financial markets – Transactions are over time (credit, loans) – even ‘good’ borrowers can become ‘bad’ if market conditions change (low interest rates become high interest rates, recession sets in, etc.) – Systemic risks – domino effects -- aggravated by unregulated securitization – Financial and capital account liberalization ‘globalized’ the risks of securitization and high leverage to Europe and other countries – The bankruptcy of Lehman Bros. and the systemic risks that reverberated ensured that the subprime financial crisis became a global financial and economic meltdown and possibly a global ‘depression’.

Responses of the US: Monetary and Financial Policies
• The US Fed cut the Fed Funds Rate from 5.25% by end of 2007 to a range of 0-0.25% by December 2008. • The Fed gave a total of $1.6 trillion (as of November 2008) of short term loans to tackle the illiquidity problems of the banks • The Fed supported JP Morgan and Bank of America to bailout and takeover of Bear Stearns and Merrill Lynch, respectively, to avoid systemic risks. But it let Lehman Bros. go bankrupt, led to global havoc and ‘depression’ syndrome. After this, it had to bail out AIG.

Responses of the US: Monetary and Financial Policies
• The Fed also took the government-sponsored enterprises Fannie Mae and Freddie Mac into conservatorship • In October 2008, to stop collapse of financial institutions and encourage interbank lending and lending to firms and households, Congress under Bush passed the creation of the Troubled Asset Relief Program (TARP) with $700 billion given to US Treasury to buy troubled assets (mostly mortgagebacked securities and CDOs) of financial institutions to clean up their balance sheets.

Responses of the US: Monetary and Financial Policies
• The initial $350 billion advanced to the US Treasury was used instead by Treasurer Paulson to recapitalize troubled banks by buying preferred shares of the banks. There is dissatisfaction concerning the transparency of the disbursements of the funds and conditions of the disbursements • The Obama economic team is using ‘stress test’ approach to solve banks’ insolvency problem. On May 6, 2009, the ‘stress test’ (which many consider too easy) determined that 10 of 19 US big banks required $75 billion capital infusion in case of a ‘worst scenario’. Bank of America required $33+ billion, Wells Fargo $13+billion, GMAC $11+billion.

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Responses of the US: Monetary and Financial Policies
• Due to banks’ unwillingness to lend to firms, the Fed in Oct. 2008 expanded collateralized lending to commercial papers, making it effectively the alternative lender to firms • The Obama team seems to have given up (just like the Bush team) on cleaning up the bad assets or bad loans in the financial system (this is a risky approach: the same approach led to a ten year stagnation in Japan).

Responses of the US: Monetary and Financial Policies
• The Housing and Economic Recovery Act of 2008 (Bush)
– insured $300 billion in mortgages assisting 400,000 borrowers – Lent money to mortgage bankers to help them restructure mortgage debts by reducing the amount of the mortgage in exchange for sharing in future appreciation of housing prices – These did not lead to significant declines in foreclosures and led to criticisms up to the current period about lack of attention to solve the housing crisis

Responses of the US: Monetary and Financial Policies
Obama and his financial team announced
• Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affortdable • A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners • Supporting Low Mortgage Rages by Strengthening Confidence in Fannie Mae and Freddie Mac.

Responses of the US: Old Fiscal Stimulus of Bush • On Feb. 2008, Bush signed into law an economic stimulus of $168 billion of income tax rebates. This led to an artificial rise in GDP in the second quarter of 2008. Since the tax rebate was temporary the recession continued in the third quarter as GDP growth turned negative and deepened sharply in the fourth quarter of 2008 with GDP growth at -6.3%

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Responses of the US: Fiscal Stimulus
• The Obama fiscal stimulus: passed American Recovery and Reinvestment Act in Februuary 2009 ($787 billion) • It consists of: – Roughly 2/3 in government spending and 1/3 in tax cuts, especially for middle and low-income families – Infrastructure spending consists of building energy grids, roads and railways, modernization of schools – The plan also calls for cash infusion into strained state budgets – Social spending included spending for education, ensuring health care for low-income groups/ unemployed and unemployment insurance

Responses of the US: Fiscal Stimulus
• The Republicans – prefer a larger proportion of the stimulus going to tax cuts and rebates as well as mortgage relief; they were able to push for tax credits for housing and automobile purchases – insist on trimming the government spending portion.

• Other developed and developing countries committed to fiscal stimuli to stop the fastdeteriorating economic decline but are in varying proximity in arriving at a strong fiscal plan • China has a strong $586 billion fiscal stimulus plan • But whether fiscal stimuli will lead to economic recovery depends on
– the soundness of the fiscal plan – the return of credit flows in the financial sector – the return of confidence of consumers, investors and lenders

Coordinated Global Responses
• In October 7-8, 2008, the Central Banks of the developed countries simultaneously reduced their policy rates on the same day. This cheered the markets only temporarily and did not stop the financial deterioration in the developed countries • Periodic statements of G7 countries to address financial system weaknesses had not led to significant results. • The G20 meeting in mid-November 2008 (sponsored by Bush) got all the member countries promising to coordinate responses to the global financial crisis.
– This did not have any impact on global confidence. – But it did get countries to calling for a rejection of protectionism

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI


Coordinated Global Responses
• The Davos World Economic Forum in Jan. 30-31 2009
– Resulted in calls by UK and Germany for a multilateral global watchdog overseeing financial institutions – Not attended by top US officials – Brought about fears of protectionism from the US Co g ess bill stipulating e sca stimulus projects should • A US Congress b s pu a g the fiscal s u us p ojec s s ou d use US materials – eventually watered down due to fear of trade wars • A view that the bailout of the US auto industry was a protectionist move

• Subsequent G7 and G20 meetings powerless to stop the global downslide

Forum on Seeking Alternatives to the Impacts of the Global Financial Crisis: May 28, 2009 Organized by FSSI



Asian Vulnerabilities to the Global Financial Crisis
Presentation by:

Financial Vulnerabilities of East Asian Countries

Joseph Anthony Lim
Economist Ateneo de Manila University

Asian Countries Fixed Their Financial Houses in Late 1990s and 2000s as a result of the Asian crisis and other financial threats • Asian countries improved their financial supervision and regulations after the Asian crisis so that the financial sector was less vulnerable to
– The toxic assets from Western financial sectors – The over-leveraging that led to high asset bubble bursting and defaults

Asian Countries Fixed Their Financial Houses in Late 1990s and 2000s

• Stronger financial regulations and supervision led to
– Higher capital adequacy ratios in banks – Limits to property lending – Limits to unhedged foreign exchange borrowings – Regulations and limits on financial investments abroad by domestic financial institutions

• This led to declining Non Performing Loan ratios in the 2000s

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Banks are generally in good shape for now: Data from Asian Economic Monitor Dec. 2008
Table 1

NPLs of Asian Banks had declined and are low: Data from Asian Economic Monitor Dec 2008
Table 2

Risk-Weighted Capital Adequacy Ratios (% of risk-weighted assets)
Economy 2000 2001 2002 2003 2004 2005 2006 Table1 2007 2008 2009

Non-Performing Loans (% of total commercial bank loans)
China, People's Rep. of
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Hong Kong, China Indonesia Japan Korea, Rep. of Malaysia Philippines Singapore Taipei,China Thailand

17.9 16.5 15.7 15.3 15.4 14.9 21.6 18.2 22.4 19.4 19.4 19.3 11.7 10.8 9.4 11.1 11.6 12.2

14.9 21.3 13.1 12.3 13.1 18.5 15.4 10.1 13.9

13.4 19.3 12.9 12.0 12.6 15.9 13.5 10.6 14.9

14.8 16.8 12.3 12.7 12.2 15.5 14.3 10.8 14.0

… 17.8 … … 12.5 … … … 14.6

22.4 5.9 18.8 5.3 6.6 8.3 15.1 5.3 17.7

29.8 5.2 12.1 8.4 2.9 10.5 17.3 7.5 10.5

21.6 3.9 8.1 7.2 1.9 9.3 15.0 6.1 15.7

17.8 3.2 8.2 5.2 2.2 8.3 14.1 4.3 12.9

13.2 1.6 5.8 2.9 1.7 6.8 12.7 2.8 10.9

8.6 1.4 8.3 1.8 1.1 5.6 8.5 2.2 8.3

7.1 1.1 7.0 1.5 0.8 4.8 6.0 2.1 7.5

6.2 0.8 4.9 1.5 0.6 3.2 4.5 1.8 7.3

… 1.2 3.8 1.4 0.9 2.2 3.5 1.5 5.3

… … 4.3 … … 2.2 3.8 … …

Hong Kong, China Indonesia Japan Korea, Rep. of

10.5 10.8 10.5 10.4 11.3 12.4 12.3 12.8 13.2 14.0 14.3 13.5 15.6 15.3 16.6 17.4 18.7 17.7 19.6 18.2 16.9 16.0 16.2 15.8 10.8 10.4 10.6 10.1 10.7 10.3 11.4 13.3 13.0 13.4 12.4 13.3

Malaysia Philippines Taipei,China Thailand

Exposure of some Asian banks to US toxic assets
• Even with better financial regulation and supervision, some Asian banks were exposed and some may still be secretly exposed to the toxic assets in the US • When Lehman Bros. went bankrupt, some Philippine Bros bankrupt banks – led by Banco de Oro, DBP and Metro Bank – were exposed to Lehman financial products (total of $300 million) and had to set up loan loss reserves • If more multinational financial institutions fail, more Asian banks may be adversely affected

Financial Vulnerability: Open Capital Accounts – Volatilities of ‘Hot Money’
• Asian economies continued an open capital account economy after the Asian crisis. China, Vietnam and India partly opened up their capital account to portfolio inflows These flowed in sharply inflows. in 2004 to early 2007. • The one with biggest capital control – China – is the only currency in developing Asia not depreciating

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



• From late 2007 up to the present, these Asian economies suffered sharp stock market and sovereign bond price collapse during the global financial crisis as foreign money took flight
– To get away from ‘risk’ to ‘safe’ assets – i.e. from Asian currency-denominated assets to US treasury notes ( (US$), the yen and gold. ) y g – To cash in on profits derived in emerging markets to finance losses in their financial institutions – Stock shares and sovereign bonds also dumped by domestic investors as their confidence plummeted as global financial markets teetered towards collapse, local exports declined, local earnings fell and layoffs increased

Stock Price Indexes (last daily price, 1 January 2002 = 100, local index)

Dow Jones Industrial Average

S&P 500 Nikkei 225 Shanghai A Share


Hang Seng Index Jakarta Composite Index KOSPI Index Kuala Lumpur Composite Index Philippine Composite Index



Strait Times I d St it Ti Index Taiwan Stock Exchange Index SET Thailand





0 Jan-02













Source: Bloomberg

Financial Markets in Asian Less Bank-Dependent and More Equity and Bond Dependent
Structural change of Asian financial assets Total billion US$ and shares on total: 1995 and 2007

• Thus the stock and bond market volatilities and declines in the emerging Asian markets reduce the efficiency and sources of financing for the real sector. • Stock and sovereign bond market declines also kill investors’ confidence and some consumer confidence.

Asia includes the People's Republic of China, Hong Kong, China, India, Indonesia, Japan, Republic of Korea, Malaysia, Philippines, Singapore, Taipei,China, and Thailand.

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Currencies tumble amid flight to safety: Data from AEM Dec. 2008
Broad Indices of Nominal Effective Exchange Rate (Jan 07=100): Selected Countries


• Sharp currency depreciations for the Asian economies are stagflationary because the potential positive impact on exports is shut off due to the plummeting world export market, especially from developed countries. • Currency depreciation also increases the external debt burden (Korea, Indonesia, Philippines) and lead to higher sovereign spreads and risk of default and more depreciation • Sharp currency depreciation also kills confidence and reduces investors’ and consumers’ spending

100.00 India Indonesia Korea Malaysia Philippines Taipei,China Thailand




Ja n0 Fe 7 b0 M 7 ar -0 Ap 7 r-0 M 7 ay -0 Ju 7 n07 Ju l-0 Au 7 g0 Se 7 p0 O 7 ct -0 N 7 ov -0 D 7 ec -0 Ja 7 n0 Fe 8 b0 M 8 ar -0 Ap 8 r-0 M 8 ay -0 Ju 8 n08 Ju l-0 Au 8 g0 Se 8 p0 O 8 ct -0 N 8 ov -0 D 8 ec -0 Ja 8 n0 Fe 9 b09

• Starting second half of 2008, foreign exchange reserves of most East Asian emerging economies ( g g (except p PRC and Philippines) have fallen. But it is not alarming.

• Sovereign bond spreads and credit default spreads have increased reflecting foreign investors p g g perceived external and public debt risks of emerging Asian economies.

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



External funding expected to tighten and become more difficult and expensive
JP Morgan EMBI Sovereign Stripped Spreads (basis points)1 2500


• The high foreign currency sovereign bond spreads and credit default spreads make it difficult for emerging Asian countries to externally finance their economic stimulus and social spending programs • For countries with moderately high debt burdens or exposure to short-term debts, the high sovereign bond spreads increase debt default risks as they cannot borrow to fund their debt service payments.


Pakistan P ki t Indonesia


764 671


Viet Nam Philippines

440 355

0 01-Jan07 1

Malaysia 11-Apr07 20-Jul07 28-Oct07 05-Feb08

People's Republic of China 15-May08 23-Aug08 01-Dec08



As of 17 March 2009 Source: Bloomberg.

Results of Asian Crisis: East Asian economies, except for China, had lower investment rates but higher dependence on net exports

Vulnerabilities in the Real Sector and Fiscal Sector

G ross Capital Form ation (% of G DP) of East Asian Countries declined after Asian crisis
50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Korea, Rep. Malaysia Singapore Thailand Indonesia Philippines

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



With lower investment rates (except in PRC), East Asian growth had been more export dependent • Lower investment rates is compensated by higher positive net exports. Trade and current account deficits before the Asian crisis had become positive t d and current account b iti trade d t t surpluses. This is part of the int’l reserves accumulation of these countries, or the so-called ‘savings glut’, which is really the big gap of savings over investments because of the investment decline (as % of GDP)

• Asia’s high dependence on trade and exports had been its most vulnerable spot in the current g p global financial crisis and economic recession.

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Advancing intraregional trade integration and openness

Structure of Asia’s Trading Patterns and Extent of Regional Trade

Evolution of ASEAN+3 exports by destination Shares (%) on total exports of ASEAN+3
PRC+HKG, 10.6

Asia, 33.8 2007

Asia, 50.4
PRC+HKG, 22.0

JPN, 8.3 ROW, 19.6

ROW, 19.2
AS EAN, 7.8

JPN, 6.4
EU, 14.9 Other Asia, 7.0 US , 31.7

EU, 14.3

US , 16.2 AS EAN, 13.1

Other Asia, 8.9

From Giovanni Capanelli’s presentation “Asian Financial Cooperation and the Global Crisis in AEA Conference – ACAES Session, “Financial Integration in Asia: New Wine in Old Wineskins?” San Francisco, 3 January 2009

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Final Demand Composition of Asian Exports in 2006: Still Dependent from the World

• Although there is more intra-regional trade, more than 2/3 of the final demand of Asia’s exports is still outside Asia, mostly in the US and Europe. Thus Asian economies are hard-hit by the deep slump in the developed economies.

From Giovanni Capanelli’s presentation “Asian Financial Cooperation and the Global Crisis in AEA Conference – ACAES Session, “Financial Integration in Asia: New Wine in Old Wineskins?” San Francisco, 3 January 2009

Export Growth : PRC, India, NIEs and ASEAN5 ($ value, y-o-y, %)
50 40


People's Rep. of China

• Already, exports and GDP growth of Asian economies had been hard hit and mass layoffs in export industries y p are going on.


20 10 0


-10 -20 -30

-9.3 -20.2 -23.6
Jan- May- Sep- Jan- May- Sep- Jan- May- Sep- Jan- May- Sep- Jan- May- Sep- Jan- May- Sep- Jan03 03 03 04 04 04 05 05 05 06 06 06 07 07 07 08 08 08 09


3-month moving average. ASEAN5 includes Indonesia; Malaysia; Philippines; Thailand; and Viet Nam. NIES4 includes Hong Kong, China; Korea, Rep. of; Singapore; and Taipei,China. Source: OREI staff calculations based on CEIC data.

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Exports industries affected and actual or possible layoffs in these sectors
• Japan, Korea, Taipei,China – automobile, electronics, other high-tech manufactured products • PRC – electronics, garments, toys and handicrafts, processed food (already affected by melamine scandal) • India – garments, IT, others g , , • Malaysia – electronics, primary commodities • Philippines – electronics, garments, coconut • Indonesia – primary commodities, others • Thailand – tourism, electronics, garments, etc • Cambodia – tourism • Vietnam – garments, electronics, coffee

• Some countries are highly dependent on overseas workers’ remittances for GDP growth, especially the Philippines and South Asian economies like Pakistan, Sri Lanka and India. • Inflows of remittances are also significant for Vietnam, Indonesia, Cambodia, Indonesia Cambodia Lao PDR and Myanmar (the last three largely unrecorded and coming from Thailand) • If the overseas workers lose their jobs (almost all countries are contracting and laying off workers), the economic slowdown may be significantly worsened in these Asian economies.

Growth of OFW Remittances (y-o-y, in percent)

Indonesia Dec-2007 Mar-2008 Jun-2008 Sep-2008 Dec-2008 Jan-2009 Feb-2009 Mar-2009 22.3 13.7 16.0 16.9 6.3 na na na

Philippines 8.9 13.2 21.1 17.1 4.6 -0.1 4.9 3.1

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



• Latest WB prediction is that OFW remittances of RP to fall in 2009 by 4%. • Latest POEA data show 216,803 land-based new OFWs in 2008 compared to 306,383 in 2007 (30% decline) • Latest Reuter poll survey revealed that Philippine overseas remittances expected to fall by 5%.

IMF Growth Forecasts getting worse and worse: Crisis worse than expected

Latest IMF Growth Rate Projections for Developing Asia

• Note that countries with predicted positive growth are those countries with high gross capital formation (China, Vietnam), big domestic demand due to large population (China, India, Indonesia, Pakistan, Bangladesh) and/or lower dependence on exports (China, India, Indonesia, Philippines).

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Unemployment Rates Increase!
Countrie s W ith Qua rte rly Une mployme nt Ra te China , Pe ople 's Re p. of 1st 2nd 3rd 4th Q Q Q Q 2007 3.4 4.0 2.1 2.3 2007 1st Q 2nd Q 3rd Q 4th Q Philippine s 1st Q 2nd Q 3rd Q 4th Q Singa pore 1st Q 2nd Q 3rd Q 4th Q
…=data unavailable Source: National sources accessed through CEIC.

Countrie s W ith Monthly Une mployme nt Ra te Hongkong, China 2009 … … … … 2009 … … … … 2009 7.7 … … … 2009 … … … … Jan Feb Oct Nov Dec 2007 4.1 4.1 4.0 3.5 3.2 2007 3.6 3 6 3.7 3.0 3.0 3.1 2007 3.8 3.8 3.9 3.9 3.8 2008 3.1 3.1 3.6 3.7 3.8 2008 3.3 3 3 3.5 3.0 3.1 3.3 2008 3.8 3.9 4.4 4.6 5.0 2009 4.3 4.7 … … … 2009 3.6 3 6 3.9 … … … 2009 5.3 5.8 … … …

2008 2.6 4.0 2.8 3.5 2008 3.6 3.5 3 5 3.1 3.1 2008 7.4 8.0 7.4 6.8 2008 2.6 4.0 2.8 3.5

• Need more social insurance as more people lose jobs and poverty will increase • Just like the Asian crisis, Asian countries still not prepared for these social insurance and social safety net • Fiscal stimuli should include social spending for the poor and vulnerable sectors adversely affected by the crisis.

Ma la ysia 3.4 3.4 3 4 3.1 3.0 2007 7.8 7.4 7.8 6.3 2007 3.4 4.0 2.1 2.3

Kore a , Re p. of Jan Feb Oct Nov Dec Ta ipe i,China Jan Feb Oct Nov Dec

Government Finance (as % of nominal GDP for 2007) Total Overall Public Economy Revenue Surplus/Deficit Sector Debt

Fiscal Stimuli of countries depend on their tax capability

Singapore Hong Kong, China Korea, Rep. of Taipei,China China, People's Rep. of Malaysia Thailand Indonesia Philippines Viet Nam Cambodia Lao PDR
…=data unavailable

22.4 21.8 27 13.3 20.6 21.8 17.2 17.9 17.1 24.9 12.1 13.6

6.7 7.2 3.8 -0.2 0.7 -3.2 3.2 -1.7 -1.2 -0.2 -5.4 -1.2 -2.7

96.3 171.2 32.1 30.7 17.3 41.6 37.5 35 62.3 43.4 … 69.3

Source: Asian Economic Monitor, December 2008.

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



• Fiscal Capacity for Fiscal Stimulus
– Countries with limited tax effort (tax revenue less than 18% of GDP): Cambodia, Taipei,China, Lao PDR, Philippines, Thailand, and Indonesia – Countries with already significant fiscal deficit in 2007: Vietnam, Malaysia, Lao PDR, Thailand, Cambodia, and Indonesia – Th Phili i The Philippines just came out of severe fiscal crisis in 2002 j t t f fi l i i i to 2006.

• There is also the question of government capacity, transparency and honesty in channeling infrastructure and social projects efficiently to the proper sectors and without leakages (e.g. through corruption)

Cost of Fiscal Stimulus Package (as % of GDP)
Total announced size 12.6 9.0 8.2 5.8 4.1 3.8 3.6 1.6 2.0 1.4 Size of approved budget 12.6 9.0 8.2 5.8 2.0 3.8 3.6 1.6 2.4 1.4

Second-Round Vulnerabilities
• Economic slowdown or recession in Asian economies will lower tax revenue collections and hamper fiscal stimuli • Failure of export firms and other firms affected by economic slowdown may lead to higher bank defaults – weaken financial sector • Reduction in household income due to layoffs, diminished work hours, currency depreciation may lead to bank defaults, especially in mortgage loans and credit card payments – again weaken financial sector and may lead to property bubble bursting

China, People's Rep. of Malaysia Singapore Viet Nam Philippines Korea, Rep. of g g Hong Kong, China Thailand Japan Indonesia

Source: The cost of f iscal stimulus package are draw n f rom OREI country w rite up; new s releases; national budget documents; ADO 2009 (Japan). Data on the f iscal balance are obtained f rom Asian Development Outlook (various issues), Asian Development Bank; International Monetary Fund Article IV, International Monetary Fund; National sources; CEIC; and OECD Outlook estimate.

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Latest developments on the Chiang Mai Initiative Multilaterilization (CMIM)

• Just like the Asian crisis – lack of adequate regional response to the extremely grave crisis. Asian yg Monetary Fund a long way off

• ASEAN+3 Finance Ministers Meetings in 2008 and Feb. 29 2009 recommended the multilateralization of the CMI with a pool of originally $120 billion of currency swaps. Pledges are:
– $38.4 billion each from China and Japan (total of $76.8B) – $19.2 billion from South Korea – $24 billion from ASEAN (ASEAN countries squabbling about how much to give) – But still no details on the mechanisms

Latest developments on the Chiang Mai Initiative Multilaterilization (CMIM)
• But a country can avail 80% of funds only with IMF conditionality!! • ASEM meeting in Oct. 2008 decided the money will be Oct a self-managed reserved pooling arrangement governed by a single contract

Details still to be determined in the CMIM
• how to conduct surveillance: which agency? • IMF conditionality to fight for: 20%, 50%, or zero? • expansion of membership? • scope -- only liquidity provision or other support? bank rescue funds? Fiscal funds? Trade financing? • mechanisms of funds disbursement, repayment schemes, escape clauses • first step to create an Asian Monetary Fund (AMF)? MALAYO PA!

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI



Continuing Failure in the International Financial Architectures
• In Oct 2008, US Fed gave Singapore, Korea, Brazil, Mexico, Australia $30 billion currency swap credit line each and $15 billion to NZ • I D In Dec. 2008 K 2008, Korea, Chi China, J Japan f forged th f ll i d the following currency swap agreements: China and Japan will provide Korea bilateral currency swaps worth $26.5 billion and $ 20 billion, respectively, to help stem won depreciation

Continuing Failure in the International Financial Architectures
• Only important countries are given special treatment and early help (US giving money to Singapore??????). The others have to run to the IMF: Pakistan, Iceland, Hungary, Ukraine etc. • Developing countries badly affected only has IMF to run to – no new international financial and economic architecture in place since 1997!! Especially since source of contagion is US and international finance’s inability to do global financial surveillance!

• The latest and most serious global recession (depression) since the 1930s is a result of a combination of
– Globalization of finance – Globalization of trade – Lack of control and supervision in global finance finance, capital flows and trade

• For the sake of developing and emerging economies, need a new paradigm and world order that controls, monitor and regulate
– Financial and capital flows – Trade flows

• Need developing countries’ pool of emergency funds controlled and conditionality imposed by developing countries themselves

Forum on Finding Alternatives to the Impacts of the Global Financial Crisis May 28, 2009 Organized by FSSI


Dennis Arroyo
The Global Economic Crisis: Assessment and Response of the National Government

Arroyo is the Director of the National Economics and Development Authority National Planning and Policy Staff. He is part of the  team that prepared the Economic Resiliency Plan to cope with the global crisis. Arroyo worked with the World Bank Washington  and Manila Offices as a consultant from March 2001‐2004. He wrote extensively on economics for the Philippine Daily Inquirer  from 1998 to 2004. He has earned his masteral degree in Economics from the University of the Philippines Diliman and is cur‐ rently a doctoral candidate in the same university. Arroyo also received further training in the United Nations at Geneva in Hi‐

Global Crisis

The Global Crisis and the Economic Resiliency Plan
Dir. Dennis Arroyo National Economic and Development Authority

“The world economy is in a once-in-ahundred years recession.”
– Japanese Prime Minister Taro Aso

“The lack of confidence is total… consumers The are not consuming, businessmen are not taking on workers, investors are not investing, and the banks are not lending.” – Governor Ordonez (Bank of Spain)

Grim signs of the recession
• Suicide rate in Japan increased to 2,345 in January 2009, or up by 15% • Two-thirds of the world is in recession
grow rate, % th

Philippine Economic Growth
9 8 7 6 5 4 3 2 1 0 2001
Source: NSCB


6.9 5.9 4.9 6.4 5.4 5.5 55 5.0 5.4

8.0 7.2 6.1 4.6

• As of March 2009, the financial crisis had 2009 wiped out around 45 percent of global wealth • US unemployment at a 26-year high













2009 Macro-assumptions MacroInflation 91-day T-bills 180 day LIBOR Forex Dubai oil Merch exports Merch imports 2009 Feb 20 3.0 – 5.0 5.0 – 7.0 1.0 3.0 10–30 P 45 - 48 $ 45 - 60 -8% to -6% -10% to -8% 2009 April 16 2.5 – 4.5 5.0 – 7.0 1.0 3.0 10–30 P 46 - 49 $ 45 - 60 -15% to -13% -14% to -12%

Export Growth
10 0 10 -10 -20 -30 -40 -50 June '08 Jul Aug Sept Oct Nov Dec Jan '09
-40.3 -41.0 -14.8 -11.4 4.4 6.6 1.1

The most vulnerable sectors
OFWs vulnerable to displacement: – OFWs who work in the US under temporary working visas (129,000); – Seafarers in the cruise ships (130,000); – Factory workers in South Korea, Taiwan and Macau (268,000); ( ) – Household service workers in Singapore, Macau and Hong Kong (48,000) Commodity exports vulnerable jobs: – Garments (121,000); – Electronics (111,000); – Wiring and harness (2,000); – Coconut oil (2,000)

Shock absorbers
• Oil prices trending down: from $ 140/ barrel to $ 50 • Inflation is easing: from 9.3% in 2008 to 3.5% in 2009 • Share of US to total Philippine exports falling: from 34.2% in 1998 to 20.1% in 2001 to 16.0% in JanAug 2008 • Ample supply of Gross International Reserves, at $ 39 B • Corporate income tax rate to fall from 35% in 2008 to 30% in 2009 • Minimum wage earners exempt from income tax


Strong banking sector
– Banks with exposure to Lehman Brothers and Merrill Lynch: Banco de Oro Unibank, DBP, Metrobank, RCBC, Standard Chartered, Bank of Commerce, UCPB, Security Bank – Banks’ exposure to Lehman Brothers: $ 386 million, or only 0.3% of total banking assets – Capital adequacy ratio (banks’ capital in relation to their risks) is 15.49% (2008). – Non-performing loans (NPL) ratio, once 18% in 2001, down to less than 4%. – Bank lending continues to expand

GIR, Current account balance, Remittances ($Mn)






30,000 8,000 20,000 4,000

10,000 0
2000 2001 2002 2003 2004 2005 2006 2007 2008



Source: BSP; *As of Oct 2008, **Jan-Aug2008, ***Jan-Jun2008 **Jan***Jan-

2008 Q4 GDP of Selected Asian Countries
China Vietnam Indonesia Philippines y Malaysia

6.8 5.5 5.2 4.5 0.1
Hong Kong S. Korea Singapore Thailand Taiwan

Quote from Agost Bernard, Associate Director at Standard and Poor’s
“Yes, the Philippines is 'lucky' because they have made the necessary adjustments and reforms when g y g g times were still good. So they are facing the global market problems and economic slowdown from a considerably improved position, compared to what they were in 3-4 years ago… “The Philippines is an 'island of calm' currently, while there is turmoil in the higher rated and previously stable countries… ”

-2.5 -3.4 -4.2 -4.3 -8.4 -10 -8 -6 -4 -2 0






“The Philippines is inherently strong, a potential beneficiary of these financial woes,” Bank of New York Mellon’s chairman for Asia Pacific, Christopher Sturdy, said in an interview (Philippine Daily Inquirer) The “The Philippines is in a relatively strong position to weather the global downturn with the economy driven by private consumption and services, which are less vulnerable to external shocks,” JP Morgan said in a report titled “ASEAN Year Ahead 2009: Philippines Well-Positioned to Withstand the Downturn.”

Economic Resiliency Plan: Objectives
1. To ensure sustainable growth, attaining the higher end of the growth targets. 2. To save and create as many jobs as possible. 3. To protect the most vulnerable sectors: the poorest of the poor, returning OFWs, and workers in export industries. 4. To ensure low and stable prices to support consumer spending. 5. To enhance competitiveness in preparation for the global rebound.

Breakdown of the P 330 B Package
PhP 160 B PhP 40 B PhP 100 B PhP 30 B addition to the budget corporate and individual tax breaks GOCCs, GFIs, private sector temporary additional benefits to GSIS/SSS/ PhilHealth members

Two waves of infrastructure
P 160 billion budget increment funds this 4,000 – 5,000 small projects in the BESF Stress speed in job creation p j P 100 billion off-budget funding Big-ticket items for PPP



P 160 billion increment
Award contracts quickly. Take advantage of window of opportunity (i.e., good weather) Realign budget from projects that may be difficult to implement (i.e., right of way issues, no detailed engineering plans) to fast projects Downscale/defer implementation of new projects without ICC/NEDA Board approval and/or difficult to implement immediately

P 160 billion increment
Scale up quick-disbursing high impact projects (i.e., labor intensive, high local value added) such as Construction, Repair, or Rehabilitation of Irrigation Systems, other local infra like roads, asphalt overlay, etc., Spend 60-80% of the productive portion of the Implementing Agencies’ budget in the S1 of 2009 Work with LGUs on infrastructure projects Periodic review of agency performance by the Economic Managers

Labor Displacement as of April 15, 2009
Laid-off OFWs (6,695)

Asian Crisis Lay-offs vs. Global Crisis Lay-

Under flexible working hours (52,498 ) Laid-off domestic workers (58,379)

84,500 58,379

Lay-offs from Asian Crisis
As of April 15, 2009 Source: Philippine Overseas Employment Administration Source: Philippine Overseas Employment Administration

Lay-offs from Global Crisis*


Comprehensive Livelihood and Emergency Employment Programs (CLEEP)
Objectives: • To hire for emergency employment • To fund and supervise livelihood p j p projects Activities are aligned to: • Super Region priorities • Needs of the 12 poorest provinces • Needs of the 12 most food-poor, provinces, and the food-poor in NCR

CLEEP job targets
• Generate 456,595 jobs • Upland forest work, farm to market roads, p , , irrigation, fertilizer production, roadside maintenance, classroom construction, other public works projects • Total cost: P 10.45 billion

Protecting the most vulnerable
Overseas Filipino Workers

OFW Layoffs
Others 7.1% Brunei 2.3% Macau 2.9% Canada 3.4% UAE 5.6%

• 24 x 7 monitoring of overseas labor-market displacements • Contract monitoring of job orders • Identification and development of new market niches • Redeployment to emerging foreign labor markets • Repatriation assistance • Expansion of livelihood /business formation programs • Business counseling, strengthening reintegration services • Massive skills upgrading and retooling services

Taiwan 78.7%


Protecting the most vulnerable
Workers in the export sector • Quick Response Teams (QRTs) in DOLE regional offices; maintain early warning system to track struggling fi li firms • Job placement facilitation • Livelihood formation/enhancement • Assistance in claiming unpaid salaries • Advocacy for companies to adopt alternatives to lay-offs • Promotion of non-wage benefits • Emergency employment

Top Areas Affected by the Global Crisis
49,613 10,225 8,529 6,212 3,906
*as of February 16, 2009 Region 4A, mainly Laguna and Cavite Caraga, mainly Surigao Norte and Sur Region 7, mainly Mactan and Mandaue Region 3, mainly Subic and Clark National Capital Region

Protecting the most vulnerable
Expand social protection programs
A. Double budget for conditional cash transfers B. Accelerated Hunger-Mitigation Program C.Add C Add P 1 B NG contribution to PhilHealth indigent program D.Add P 5.66 billion for Training for Work scholarships E.Hike DOH allocation for primary and secondary hospitals F.Deploy nurses to underserved areas (NARS program) G.More student loans H.Matching grants to LGUs

P 100 billion for large infra projects
• Large infrastructure projects, some mentioned in the 2007 SONA • Longer time frame: after 2009 • Drawn from the master list of the Comprehensive and Integrated Infrastructure Program (CIIP) • More time for public scrutiny; important to stress transparency


Comprehensive and Integrated Infrastructure Program (CIIP)
2008-2010 and beyond Total investments = PhP 2,006.26 billion
Support to ARCs Social 31.88 Infrastructure 2% 167.91 8% Communications 56.49 3% Water Resources 347.53 17%

P 30 billion for additional benefits
To increase purchasing power Provide additional benefits for PhilHealth, GSIS and SSS members for at least 18 months Funds k from the diff F d taken f h difference between contributions and b ib i d claims and benefits. PhilHealth Board of Directors approved on Feb 12 the revised Inpatient Benefit Package Results in a 35% increase in annual benefit payments

Relending Programs 36.69 2%

Transportation 754.69 38%

Power and Electrification 611.07 30%

Government Spending: Largest Projects in History
in billions of USD U (inflation-adju usted)


1000 900 800 700 600 500 400 300 200 100 0


The New Deal Race to the Moon Marshall Plan S&L Crisis

Louisiana Purchase

Source: Intel







Government Spending: Largest Projects in History
3500 3000 in billions of USD U (inflation-adju usted) 2500 2000 1500 1000 500 0 1803
Source: Intel Louisiana Purchase The New Deal NASA Marshall Plan Race to the Moon S&L Crisis ’09 Rescue Funds

“We have agreed to make available an additional $850 bn of resources thru the IMF and MDBs…we will ensure availability of at least $250 billion over the next two years to support trade finance… ” – G20 Communique "This could well be a turning point because the authorities got together and they have taken the steps.” – George Soros







AllAll-Time Low Global Interest Rates
6 5 4 3 2
Fed Funds Rate ECB Key Interest Rate

US Fed Chief Bernanke tells Congress: recession over by end-2009 end• Economy to bottom out, then turn up later in 2009 • US GDP contracts by 6.1% in Q1, but largely due to depletion of inventories. • “As inventories are worked down, then firms will be able to increase their production to meet what looks to be some stabilization in final demand.” • Firms may still be cautious about hiring

1 0 2003








China’s Stimulus Package is Working
• Stock market up 47% in April from trough in October 2008 • Car sales hit monthly record in March • Cement sales of biggest manufacturer up by 15% • New loans of $670 B in Q1 almost as much as for whole 2008 • Index of entrepreneurs’ confidence up in Q1, after plunging in Q4

Overseas employment holds up
• 15,000 to 20,000 jobs offered in Guam, 60,000 in Saudi Arabia, 20,000 in Qatar • Saudi Arabia building 5 mega cities; Filipino workers favored • Deployment to the Middle East will push remittances higher in the second semester • Only 6,695 OFW layoffs so far, compared to 3,000 OFWs deployed per day

Inflation rapidly falling, will boost personal consumption
14 12.3 12.4 12 Inflation Rate (in %) R 10 8.3 8 6.4 6 4 2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2009 4.9 5.4 9.5 11.4 11.8 11.2 9.9 8 7.1 7.3 6.4 4.8

Stock markets still on the uptrend
Market DJIA Nikkei 225 FTSE 100 Lowest 6,547.05
(9 M h) March)

Latest 8574.65
(8 M ) May)

% Change 30.97 33.70 27.05 28.02

(10 March)

(8 May)

(3 March)

(8 May)



(16 March)

(8 May)

Source: National Statistics Office


Exports start to grow again
Growth of Merchandise Exports (%) Month-onMonth Year-on-Year Oct-08 -14.8 -10.5 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 -11.4 -40.3 -40.6 -39.0 -30.9 -11.5 -23.9 -6.1 -0.2 15.9

Job losses here now tapering off
• SEIPI: Electronics industry starting to recover “We are seeing month-on-month improvements …it looks like the market has bottomed out ” – Arthur Young, SEIPI chair out. Young • Sec. Roque OF DOLE: 14,000 employees displaced by the crisis got their jobs back as companies started to rehire • Sec. Panganiban of NAPC: 75,000 have been accepted into the CLEEP • NLEX Phase 2 C5 to create 100,000 jobs

Layoffs bottom out
Workers Displaced by the Crisis

October ’08 November ’08 December ’08 b January ’09 February ’09 March ’09

4,454 11,116 11,961 11 961 10,333 10,228 14,512

- Smoking gun of impending recovery: y py p layoffs sharply drop in April

Leave no one behind. Walang iwanan.

April 1-15 ‘09 Total



Rosario Bella Guzman
The Global Economic Crisis: A Persepective from the Civil Society

Guzman is the Executive Editor of IBON Foundation Inc., an independent development institution established in 1978 that pro‐ vides research, education, publications, information work and advocacy support on socioeconomic issues. Her authored book,  "The Global Food Crisis: Hype and Reality" is one of her many writings on socio‐economics. She has given many lectures across  the country and round the globe in support of people’s campaigns and struggles. 


The Global Economic Crisis: A Perspective from Civil Society

From crisis to crisis
    Subprime mortgage crisis – 2007-08 Fuel and food price crisis – early 2008 Global financial crisis – late 2008 to today Given systemic imbalance between production & consumption, capital sought profits from: ti it l ht fit f 1. Cheap labor & raw materials 2. Capturing markets for goods 3. Capturing markets for services + 1. Debt-driven consumption 2. Speculation in finance & commodities

IBON Foundation May 28, 2009

End of globalization?
1. Stalling global trade 2. Stalling capital flows (investment/debt)
 World exports 4Q-08 decreased by 20% (Q-o-Q) or 11% (Y-oY) (c/o WTO)  Worldwide FDI inflows shrank 21% in 2008 to $1.4 trillion (c/o UNCTAD)  Net private debt and equity flows to 3W will fall from $1 trillion in 2007 (7.7% of GDP) to $530 billion in 2009 (3%) (c/o WB)  Net private-capital inflows into 3W: $929 billion (2007) halving to $466 billion (2008)  est. $165 billion 2009 (c/o IIF)  ODA flat in 2005-07 falling by $20 billion in 2009 (c/o ODI)
 3W bond market transactions $50 billion in 2Q-08 down to $5 billion in 4Q-08  Note: FDI flows to 3W still growing in 2008 albeit by only 4% from a rise of 21% in 2007

Since 1980s: globalizing the Philippine economy
 Trade & investment now much larger share of domestic economy (as % of GDP)
 Trade doubled: 52% (1980)  95-105% (2005-2007)  Foreign investment quadrupled: 4% (1980)  16% (2007)

 Record joblessness in last 8 years; 4.1 million jobless + 6.6 million underemployed in 2008  Deep poverty:
 approx 70 million Filipinos live off P110 or less/day  … P18/day in poorest 10% of families + then for succeeding deciles P28, P36, P44, P54, P68…

3. Stalling migration

 Remittance flows: $281 billion (2007), $305 billion (2008)  est. $290 billion (2009) (c/o WB)



Since 1980s: globalizing the Philippine economy
 Growing inequality
 Top 20% (3.5 M families) account for 53% of total family income… poorest 80% (13.9 M families) divide remaining 47%

Since 2008: globalized sectors at greatest risk
 Internal weaknesses + greater external vulnerability  Unprecedented dependence on low value-added exports, one-sided foreign p , g investment & overseas remittances
    84% of exports to just 10 countries 77% of FDI from just US, EU & Japan 88% of remittances from only 10 countries Source countries all seeing drastically slowing or even negative growth

 Record economic refugees
 9-10 million OFWs  Manufacturing smallest share of economy since 1950s, agriculture smallest in country’s history

Deepening Philippine crisis
1. Drastically slowing economic growth
  2008: growth slowed in 60% of economy 2009: Will fall to less than 3% which is less than half growth in 2007

Deepening Philippine crisis
3. Falling real incomes & worsening poverty
 2006, at approx P110 or less per person per day:
  Poor families – 13 9 million (official: 4.7 M) 13.9 47 Poor Filipinos – 70 million (official: 27.6 M)

2. Worst joblessness in country’s history is rising even further
  2008: 10.7 million unemployed + underemployed 2009: Could rise to some 12-13 million 12  Of which at least 5 million outright jobless (increase of 900,000) Retrenchments, less job creation, deteriorating quality of jobs

 2009: Worsening poverty due to joblessness and falling incomes
  More poor Deeper poverty for already poor



Government ‘response’
 Pseudo-stimulus/mitigation measures for now…
 Reported plan/package: P330 billion
     P160 B increase in 2009 natl govt (NG) budget P40 B corporate/individual tax breaks P100 B off-budget infrastructure fund (GOCCs GFI, private off budget (GOCCs, GFI sector) P30 B additional benefits to GSIS/SSS/PhilHealth members + Alternative livelihood programs, jobs placement services & loans

Urgent relief: Give people more of social services & economic share long denied them
1. Restore real per capita social services spending to at least 1997 levels
 Additional P205 B (education), P36 B (health) and P5 B (housing) P125 ATB nationwide wage hike, P3,000 increase in government salaries Protection against formal/concealed cuts in wages, salaries & benefits … increase taxes on wealth, luxury goods & services, unproductive assets & transactions


Support consumption:
• •

 … before returning to “business as usual” and globalization policies which have supposedly built “sound fundamentals”


Remove VAT on food & oil products…

Urgent relief: Give people more of social services & economic share long denied them
4. Shift public spending to labor-intensive & basic rural infrastructure projects that directly improve people’s livelihoods
 Ex. P100 billion not for a few big projects but small irrigation systems, farm-to-market roads and postharvest facilities h t f iliti Stop debt payments and cancel odious/illegitimate debt Crackdown on corruption Reducing spending on military and war which just feeds human rights violations

Radical economic reforms: back to basics
1. Agrarian reform & agricultural development
  Land to the tillers, extension & support services Cooperativization & modernization Filipino industry is possible… .. and essential for jobs, incomes, capital accumulation, technology & sustainable growth Protect the Philippine economy Support Filipino agricultural & industrial producers Resources towards national agricultural, industrial & social development Crackdown on wasteful spending & corruption Oppose financial services liberalization


Building national industry
 

5. Free up public resources:
   3.

Ensure gains from foreign trade and investment
 


Banking, finance and fiscal policy


Clarence Pascual
Challenges in MSME Development in a Global Crisis Situation

Pascual was educated at the UP School of Economics where he gained a Bachelor of Arts Degree (1979‐1983) and subsequently  a Master of Arts (1994‐1996).    He has worked extensively in government and the private sector as a researcher and professional economist. He has conducted  research for local non‐government organizations as well as international organizations including the International Labour Or‐ ganization (ILO), the Asian Development Bank (ADB), and the World Bank. 

Recovery and Reconstruction
Finding Alternatives to the Impact of the Global Financial Crisis FSSI Public Forum 28 May 2009
Clarence G Pascual

Some key issues facing the Philippine economy and the pp y impact of the global crisis

Labor left behind in last growth cycle
 Inability of the economy to create enough

Growth and unemployment in past crises and recovery
Unemployment during crisis and recovery, % of labor force 11.0 11.0 10.1 8.6 86

jobs, let alone quality jobs, lies behind the slow progress in tackling mass poverty and hunger







Unemployment and hunger rates
Unemployment and Hunger Rates, SWS

Net job losses in last 2 crises
Asian Crisis, 1997/98
Global Crisis, 2008
0 -50

0 -50 -100 -150 -200 -250
Jan-08 May-08 Sep-08 Jan-09

-100 -150 -200 -250


30 25 2 20 15







10 5 0

 Mfg employment down to 2.8 M in Jan 2009

from 3 M in Oct 2007 or net job loss of 280,000
 Net losses of 40,000 in construction and

Ju l-9 Ja 8 n99 Ju l-9 Ja 9 n00 Ju l-0 Ja 0 n01 Ju l-0 Ja 1 n02 Ju l-0 Ja 2 n03 Ju l-0 Ja 3 n04 Ju l-0 Ja 4 n05 Ju l-0 Ja 5 n06 Ju l-0 Ja 6 n07 Ju l-0 Ja 7 n08 Ju l-0 Ja 8 n09

30,000 in finance in Jan 2009
Source: NSO, LFS various quarters

Dismantling of manufacturing
 Long-term decline in manufacturing,

Weak job creation before crisis
Net Job Creation, mfg
200 150 Thousands s 100 50 0 -50 -100 -150

a key driver of growth in high performing Asian economies

Source: NSO, LFS various quarters

19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 20 07 20 09


Shrinking manufacturing sector
Share of mfg to total employment
12% 11% 10% 9% 8% 7% 6% 5%
19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09

Falling investment spending
 Free fall in investment spending

since 1997 for unknown reasons constrains future growth prospects

Source: NSO, LFS various quarters

Investments, % of GDP
25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007
Cumulative gap: 35% GDP

Diminishing public social services
 Squeeze on social services owing to

ill-advised policy to balance the budget exposes poor to risks posed by globalization


Social services, % of GDP
6 5 percen nt 4 3 2 1 0 2000 2001 2002 2003 2004 2005
Cumulative gap: 7 % GDP

 Short term impacts must be attended to  Welfare impact of job loss can be dramatic for the displaced worker and family  Deep scars that will take time to heal  Lost productive capacity cannot be replaced overnight  Investor confidence takes time to recover  Labor market lags in terms of recovery  Crisis shook confidence on many cherished

beliefs (and silly thoughts) about the economy

Globally, a rethinking of major planks of growth strategies and economic policy (e.g. export-led growth, finance, regulation, deficits)

Two principles
 Long-term elements (reconstruction)

Need for a bold program of short-term recovery and y long-term reconstruction

embedded in short-term programs (recovery) to achieve impact and sustainability  Fundamental reversal of direction and strategy: we must reject the “free-market” policies, esp in their extreme forms


Some elements
 A more realistic fiscal policy

that promotes growth and job creation
 Industrial policy that pays attention to

the linkage between industry and agriculture, agriculture and producer incentives  Full employment as the central goal of development (poverty reduction follows)


Jerry Pacturan
Community Experienes: Sailing Through Rough Times

Pacturan. Jing is the Executive Director of the Philippine Development Assistance Program and Chairperson of the Organic Certi‐ fication Council of the Philippines (OCCP) . He has been at the forefront of rural enterprise development and peace and develop‐ ment for almost twenty years. He initiated and managed a GTZ‐funded country entrepreneurship project of the Department of  Trade and Industry, as well as the World Bank‐funded community based training enterprise development. 

Changing Agricultural Context

Social Enterprises in Organic Agriculture: Small Farmers Response to the Economic Crisis

Agriculture, a key issue in trade negotiations
Opportunity to put SA/OA in the development debate, agenda & priorities of governments & multilaterals; food crisis

Rise of supermarkets
New markets, new approaches

Preference for healthy foods & organic products
US$40B organic market; 31 million has. of certified organic farms; Philippine market of about US$20M

Food security & hunger reduction
Per FAO halving hunger by 50% in 2015 can’t be met; need to seek new solutions to address FS & hunger (SA/OA & VC)

PRIME Value Chain & Stakeholders
NGAs, LGUs, Academe, NGOs, Donors, Private Sector
 Policy support; Information; Technology; Communication

2 Industry Associations + 1 Marketing Corporation

Examples of community efforts in mainstream markets
• Don Bosco Foundation in North & South Cotabato  Organic & Conventional Rice • Sultan Kudarat Muscovado Farmers & Millers Corporation  Muscovado Sugar • Pecuaria Development Cooperative in Camarines Sur  Organic Rice

 Financing for trading, equipment, working capital; production Trades


 Capacity bldg for technology, organizational & enterprise devt






Don Bosco - Bios Dynamis Coop
• Sales composition: 60% OR, 40% CR • Increasing annual sales from P27M in 2007 (8mths); P54M in 2008; projected P64M in 2009 • 2.2 % net income in 2007 & 3.8% in 2008 • OR production cost per hectare averages P17k compared to P35k for CR • OR retail price is higher at P34-40/kg. compared to P31-35/kg. for CR • OR gross profit margin of 10% compared to CR 1% • Distribution channel through local shops ensures faster sales turn-over

Pecuaria Coop Snapshot (6years growth)
Area Planted to Organic Rice (in hectares) No. of farmers involved in OR Productivity or yield per hectare Total production cost per hectare* Farmgate price per kilo UMFI buying price per kilo No. out outlets/buyers in Metro Manila

Year 2002
55.5 37 60 sacks

Year 2008
262 100 90 sacks

P 20,000 P 20 P 25 Selected SM Supermarkets, Shopwise,

P24,978 P 35 P 35 All SM Supermarket All Rustan’s Supermarket All Ever Supermarket All Shopwise S Sh i Supermarket k t All Robinson Supermarket All South Supermarket All Puregold Supermarket All ROB Supermarket All CVC Supermarket All Tropical Convenience Store All Walter Mart All Robertson Supermarkets; Liberty Commercial Center; other institutional buyers P 26,718.00 P 14.7 M P 1M

Local market

Farmer’s income (per ha.) Coop Sales from OR Coop Net Income from OR

Selected outlets of Robertson Supermarket; Liberty Commercial Center; other institutional buyers P 16,000.00 P 1.7 M ( P .533 M )

*Bulk of the costs are land preparation, transplanting, post-harvest (harvesting, threshing) and irrigation

Pecuaria Cooperative
• • P7M sales in 2007; P14M in 2008 due to expansion outside of estate Jan-March ’09 sales is 40% only of sales of same period last year; temporary slump in demand in Metro Manila market Manila market in previous years is 75% of OR sales; 25% local/Bicol sales in 2009, i 2009 market expansion & k t i diversification will be carried out in  local/Bicol, Visayas & Mindanao From ABC to BCD market Diversification into organic fertilizer will fillin the drop in OR sales; from P3M OF sales in 2008, projected is P6M in 2009 ABC consumer market for OR is 160,000HH @ ave. of 225kg/HH/year = 1.44B (@ P40/kg)

•Muscovado yield of 6.5tons/ha. or P195k gross sales/ha.; with mill rental of 48k; net is 147k; less prod’n cost 35k, farmer owner makes 112k •300% increase in farmgate price within 4 years (P14/kg in 2005 to P40/kg in 2009) •P9M sales in 2007; P5M sales in 2008; P18M sales projected in 2009 (slump in sales l j di
due to conflict last year & climate change)

• •

•Sales in malls continue to increase • ABC consumer market is 540,000 HH with 20kg annual HH consumption or about 756M (@70/kg); grows 5-10% per annum •Diverse market for MS
 households  industries  export

• •


Some Key Lessons & Implications
• Organic agriculture offers low production cost & attractive market prices • Crop/product diversification boosts incomes at HH & coop levels • Product-market development & diversification; market for OR commodities is largely untapped • Industry-oriented using VC approach

Product/Market Development Strategy Formulation Framework
Same Product Same Market Same Product Different Market


Market Development

Different Product Same Market

Different Product Different market

Product Development


From the PDAP family… Daghang salamat! Maraming salamat! Thank you!


Loreta Rafisura
MSME Sector: Surviving in a Period of Crisis

Rafisura is founder and director of Salay Handmade Paper, a family‐owned  business that started in 1987 with the objective of  providing a sustainable livelihood for the people in the local area.  It makes its paper out of cogon grass – a weed that grows  naturally among the crops.    She  Also founded the non‐governmental organization People’s Economic Council  that seeks to provide steady employment to  the inhabitants of Mindanao. Ms Rafisura also continues to be an active member of the local chamber and the Philippine Fair  Trade Movement. 



Fair Trade & Non-Fair Trade Booked Sales

Non-FT Org. 27.89%

Little Money Ignorance and rural naiveté No plan No technology and A cancer survivor leader

   

FTOrg. 72.11%



Everyday prayer at 3:00 o’clock in the afternoon





PhilCom provided SHAPII with a telephone line since about 12 years ago.




Guardians of the Earth





Foreign Exchange
49.03 48.53 48.53 47.90

1. USD : PHP ( 2007 )

46.96 46.34 46.24 45.70 46.19



Took us long to get steady on our feet… But in the meantime, we relied on


















We listened to our partners and the government agencies and learned from our readings.





Labor and Management seek to harmoniously work on this together

MORE focused on the

So we will on our




Hog Grower Program to all interested employees who has their own pig pen

“Sweet Camote” for sale to all workers



Just try to do your best and God will do the rest!

Thank you so much…. y


Lydia Canalija
Cooperatives Amidst Economic Crisis

  Canalija is a development educator and consultant specializing in cooperative management and enterprise development. In the  last 15 years, she has been working within national development organizations, foundations, cooperatives, and government in‐ stitutions in the Philippines and in other countries in Asia. Her expertise includes institutional strengthening of financial opera‐ tions and systems development, as well as development of savings and loan products,among cooperatives. She is on the Board  of Directors of the Visayas Cooperative Central Fund Federation and currently the manager of LIPI Employees Multi‐Purpose Co‐ operative. 

Milo Tanchuling
Finding Alternatives and Solutions

Tanchuling is the Chairperson is the Foundation for Sustainable Society, Inc (FSSI) ‐ an eco‐enterprise resource institute that ca‐ ters to the sustainable economic development of poor communities in the Philippines.    He has also been the Secretary General of the Freedom from Debt Coalition (FDC) since 2005 and has been an elected member  of its Board of Trustees since 1998. He is also an active member of the Regional Committee of the Jubilee South‐Asia Pacific  Movement on Debt and Development (JS‐APMDD). He also presently seats in the NGO Council of the Philippine National Anti‐ Poverty Commission (NAPC).     He has an extensive experience in rural democratization and development work. His earlier field work in community develop‐ ment was in the rural communities of the Province of Bulacan. He continued his work with the peasant sector and rural commu‐ nities during his stint with the Philippine Peasant Institute from 1983‐1996 and the Philippine Network of Rural Development  Institutes (PhilNet‐RDI) from 1996‐2005.    He has a degree in community development at the Institute of Social Work and Community Development (now the College of  Social Work and Community Development) in the University of the Philippines. 

Alicia V. Euseñia
Reactor from the Government Sector

  Eusenia is the Regional Director of the Department of Trade and Industry. She  was represented by DTI Assist. Regional Director  Linda Ong Boniad. 

Sylvia O. Paraguya
Reactor from the Cooperative Sector

  Paraguya is the Chief Executive Officer of MASS‐SPECC Cooperative Development Center. A chemical engineer, she has chosen  to focus on development work after her two‐year masters in business management course at the Asian Institute of Manage‐ ment and a six‐month stint at the World Trade Center Manila. 

Dina Anitan
Reactor from the Women Sector

  Anita  is the Regional Coordinator of WAND Northern Mindanao and is the acting Executive Director of Touch Foundation, Inc,  an NGO operating in northwestern Mindanao with focus on natural resource management, human resource development and  agrarian and aquatic reform. She is also the chair of Pilipina‐CDO.  

Noel M. Nalzaro
Reactor from the Private Sector

  Nalzaro is the Vice‐Presiden of the Philippine National Bank for Mindanao Commercial Leadership Centers Division. He finished a  bachelor’s  degree in Business Administration at Silliman University and MBA at De La Salle University. He passed the CPA board  examinations and is a past trustee of Oro Chamber. 

Rodolfo Meñes
Reactor from the Private Sector

  Menes, and President of the Oro Chamber ‐‐ the First Hall of Fame Most Outstanding Chamber of the Philippines. He is also Vice ‐President and General Manager of Pueblo de Oro Development Corporation. 

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