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DEVELOPMENT RESEARCH NEWS PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas

Vol. XXV No. 4

July-August 2007

DEVEL O PMENT RESEARCH NEWS July - August 2007

ISSN 0115-9097

A post-crisis prescription: being one group matters

Editor’s Notes Valuable lessons have been drawn from the financial crisis that hit East Asia 10 years ago. From this sad experience, and based on lessons learned from the global financial instability, Asian countries are now more aware and capable of initiating the needed reforms, especially those that are directed toward crisis prevention. However, more structural reforms are needed, and these can be best undertaken with an increased regional cooperation. This is what PIDS President Dr. Josef T. Yap underscores in his paper, “Ten years after: financial crisis redux or constructive regional financial and monetary cooperation?,� our main feature for this issue. Dr. Yap emphasizes the need to accelerate regional cooperation and integration, along with the two economic powers in the region—China

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What’s Inside 4

Philippines seeks a piece of the Chinese market

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PIDS, UNICEF tie up for policy studies affecting children

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PIDS launches two new PIDS Corners in Region 10

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Good things come in two’s for PIDS!

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Frequently asked questions about bird flu

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hen the 1997 East Asian financial crisis hit the region, it dramatically halted what was touted as the Asian economic miracle. Huge capital outflows, sharp decline of currencies in the region, and falling asset and stock market prices resulted in millions of people falling below the poverty line due to many business closures. Ten years later, East Asian economies seem to be experiencing the same circumstances prior to the crisis: huge capital inflows influenced by hot money, rapid appreciation of currencies in nominal and real terms, surging stock prices, and little policy space to implement countercyclical measures. The difference now, however, is that countries have been accumulating large amounts of foreign exchange reserves albeit at the expense of domestic investment and economic growth—this, Josef T. Yap, president of the Philippine Institute for Development Studies (PIDS), describes in his paper, “Ten years after: financial crisis redux or constructive regional financial and monetary cooperation?.� In order to forestall problems created by unstable capital flows, and prevent another Asian crisis to occur, Yap said it is high time to step up the regional cooperation and integration agenda in unison with China and Japan, the two economic powers in the region. An important item in the agenda is to project our common interests, particularly with regard to the reform of the international financial architecture. Post-1997 Asian crisis era With the global financial instability caused by the 1997 crisis, the international finance architecture (IFA) needed reforms to prevent another currency and banking crisis and to better deal with such a problem should it recur. Majority of the initiatives for reforming the IFA were directed toward crisis prevention. These include measures to enhance transparency and accountability, promote sound policies, and strengthen institutional un-


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http://community.middlebury.edu/~scs/docs/ student%20research%20project%20January%202006/

derpinnings at the domestic, regional, and international levels. These are specifically in the form of initiatives for promoting international standards and good practice in domestic financial systems, enhancing surveillance and capacity building, and for the IMF to create a precautionary line of defense such as a contingent credit line and a reserve augmentation line.

The Asian Financial Crisis began with the July 2, 1997 devaluation of the Thai baht and soon spread throughout East and Southeast Asia.

It is the main goal of the crisis mitigation and resolution agenda, on the other hand, to prevent a disorderly process if and when an economy experiences a financial crisis. Under these reforms are the sovereign debt restructuring mechanism, collective action clauses, draft principles for stable capital flows and fair debt restructuring in emerging markets, and dealing with financial volatility via countercyclical measures. Based on existing evaluations, Yap cited two underlying reasons that led to the shortcomings in the IFA’s reforms. One is the lack of an agreed international reform agenda that answered only the priorities established by a few industrialized countries that are changing through time and are implicit. The other is the uneven focus of reforms that largely worked on strengthening the macroeconomic policies and financial regulation in developing countries with little success in the international arena, including the regional aspect. This is a significant drawback as problems being experienced among countries are not solely domestic but are also influenced by imperfections in the international capital markets. Unipolar financial system The root cause of global financial instability is its unipolar character brought about by the use of the US dollar as an international currency. The unipolar global financial system is seen as the main factor for the uneven and discontinuous progress with the IFA’s reforms, specifically the inability to create a more conducive macroeconomic environment.

Not only is the international trade dominated by the US dollar, most of the international reserves are also held in US dollars.

July-August 2007

The US can pay for its external deficits by printing dollars, which are not expected to be redeemed soon. Thus, the US-led private financial institutions significantly influence international savings and investments while the US-led international financial institutions are at the forefront of determining the macroeconomic policies of developing countries. The United States has also been appropriating seigniorage that is created through expanding world trade and cross-border capital flows. A real reform of the IFA, therefore, according to Yap, cannot be expected in this scenario because the US will not surrender the benefits of financial gain and ideological hegemony that it is enjoying. As noted, the system is unjust because the seigniorage is not shared worldwide and does not reach low-income countries. This then brings to fore the need to reduce their dependence on the present IFA and develop their own regional financial architecture just like what the European Union did and which East Asia envisions to achieve. East Asia regional financial and monetary cooperation If a stable macroeconomic environment is to be realized and pushed in the global setting, it is highly crucial that an East Asian regional cooperation is forged to serve as a venue where economic issues of common interest and concerns may be raised, discussed, and acted upon. Yap cited three reasons from a study by Masahiro Kawai of the Asian Development Bank Institute why regional financial and monetary cooperation in East Asia should be advanced.

First is the deepening economic interdependence as manifested by the increasing intraregional trade in the region. Economic regionalism, through various types of policy coordination, can facilitate collective action among countries in the region. Second, East Asian governments have to realize the need to develop their own regional arrangements so as not to be disadvantaged in the global competition and multilateral negotiations amid the fast and continuing European and North American regionalism. Third, the bit-


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July-August 2007

http://www.kantei.go.jp/jp/abephoto/2007/01/15asean3.htm l

ter experience from the 1997 crisis demonstrated the need to establish regional selfhelp mechanisms for effective prevention, management, and resolution of regional financial crises. If the region also wants to increase its voice in the global financial environment, then regional financial cooperation is necessary. There are two areas of monetary and financial cooperation: cooperation in macroeconomic policies and financial sector reform and development. Progress in terms of membership has been expanded to other East Asian countries such as China, Japan, and Korea, thus the forming of the ASEAN+3. Through the years, the ASEAN+3 has come up with a number of initiatives to strengthen policy dialogue and collaboration in financial, monetary, and fiscal issues of common interest. An example is the study group composed of senior finance and central bank officials formed in 2001 to look into how economic reviews and policy dialogues could be made more effective. Another is economic surveillance, which involves analysis of the macroeconomic conditions of member countries as well as identification of vulnerabilities in the economies and appropriate policy responses to these vulnerabilities. Resource coordination or resource pooling is another aspect of regional financial and monetary cooperation. It is made possible by providing liquidity support to participating countries that are experiencing shortterm balance-of-payment difficulties. The centerpiece of resource coordination in East Asia is the Chiang-Mai Initiative (CMI). With the main objective of addressing shortterm liquidity difficulties in the region, the CMI has evolved into a network of bilateral swaps and repurchase agreements among countries in the ASEAN as well as China, Japan, and Korea. Just last May 5, 2007, the ASEAN+3 nations agreed to pool the region’s vast foreign currency reserves. The Asian Bond Markets Initiatives endorsed by the ASEAN+3 was also pushed to develop efficient and liquid bond markets in Asia and to advance the use of Asian savings for Asian investments.

Membership has been expanded to other East Asian countries such as China, Japan, and Korea, thus the forming of the ASEAN+3.

Not an easy task Despite these initiatives toward closer cooperation and linkage, there are challenges and issues that need to be addressed so that regional financial and monetary cooperation can reach its full potential. A primary concern, Yap noted, is the limited scope and depth of the structure of economic dialogues that thwart more efficient peer review, open dialogue, and sounder policy decisions.

There is also the uneven progress of the financial sector among countries in the region. Added constraints come from different regulatory standards and procedures, which impede the development of a fully integrated regional financial market. In light of all these, a political consensus among countries in the region is crucial in order to advance institution building. There should also be a conscious effort toward nurturing economic regionalism on trade and investment and financial issues, and eventually toward the formation of an East Asia Economic Community. Policy dialogues on common issues affecting the region, such as investment rules, protection of intellectual property rights, macroeconomic policy management, food security, and energy security, should likewise be promoted. Citing Kawai, Yap also emphasized the need for close cooperation between China and Japan—the region’s economic powers. Resolving their “history issue” permanently is important for the two countries to rebuild mutual trust for greater economic integration. CSM


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July-August 2007

Philippines seeks a piece of the Chinese market

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hat many Filipino agriculture producers are cynical about the PhilippinesChina free trade agreement (FTA) is anticipated. The entry of cheap Chinese produce could harm the backbone of their livelihood. The same reason makes the government reluctant in the beginning to open the country’s agriculture sector to China. But, as PIDS senior research fellow and trade economist Erlinda Medalla and co-author Jenny Balboa noted in their paper, there is no denying that China offers a huge potential market for many businesses around the world. The time to penetrate the huge Chinese market should start now to gain a firstmover advantage. At the same time, the Philippines needs to maintain whatever foothold it has achieved in penetrating the Chinese market. It would need to keep apace with its other neighbors in the Association of Southeast Asian Nations (ASEAN) region that have already formed an economic partnership with China. How to assist local industries build their own strength and competitiveness in the global market is the big challenge that the government needs to address, they said.

PIDS senior research fellow and trade economist Erlinda Medalla said that the time to penetrate the huge Chinese market should start now to gain a first-mover advantage.

Talks about formalizing an FTA between the ASEAN and China began in 2001. In the following year, a framework on comprehensive economic cooperation was signed between China and the ASEAN member states. In 2005, the Philippines finally gave its nod to the agreement, which will begin with the Early Harvest Program (EHP). The EHP is the first of three tracks on liberalizing goods. The other two are the Normal Track and the Sensitive Track. According to Medalla and Balboa, the EHP entails the gradual removal of tariffs toward zero tariff in a number of products, which include live breeding animals and other live animals, meat of sheep,

goats, horses, meat of bovine animals, fish (live, chilled, frozen, dried), ornamental fish, crustaceans, mollusks, milk and cream, live plants, and fruits and vegetables (including desiccated coconut, bananas, pineapples, and mangoes). Primarily because of the sensitivity of these products, the Philippines was the last country in the ASEAN to seal the agreement with China. “Negotiations were also slowed down as a result of intensive lobbying in affected sectors, particularly sugar, pork and poultry, rice and corn, and vegetable. Eventually, the Philippines was able to come up with a package that represents the strategic interest of the agriculture sector which is, at the same time, acceptable to the Chinese. The Philippines was also able to extend the coverage of the EHP to coconut oil and cocoa powder, products that the country has a comparative advantage in,� Medalla related. One of the sectors that stand to gain from the liberalization is the natural ingredients market. A potentially big export market for the Philippines, it does not require a big capital to be developed. Other sectors with high potential are poultry, crops, and fisheries. Another is coconut, especially coconut oil and medicinal products derived from coconut. These are alternative avenues farmers and producers can go into. The agreement also comes with technical and cooperation projects aimed at enhancing the sense of community within the region, reducing tensions, and contributing to stability. Examples include trade policy dialogues, technical assistance for enhancing market access opportunities for specific products (e.g., agricultural and tropical products, textiles and clothing, machinery and electronics, footwear, oils and fats, foodstuffs,


DEVELOPMENT RESEARCH NEWS

forestry, aquaculture products, energy), and facilitation of visa arrangements for business people. In a forum in Cagayan de Oro City on June 20 conducted by PIDS in collaboration with the Cagayan de Oro Chamber of Commerce and Industry, and the National Economic and Development Authority Region 10, most of the participants who listened to Medalla’s presentation expressed optimism at the potential gains from the Philippines-China agreement. One of them is the president of the Chamber himself, Engr. Elpidio Paras. “Even if China is an economic powerhouse, there are advantages by which the Philippines can be ahead of China. By discussing all the avenues of opportunity for all of us in such a big economy like China, we can find our niche and excel there.” This is what PIDS President Josef T. Yap likewise emphasized in his presentation in the same forum. According to Yap, while China’s emergence as an economic giant in the past 25 years has dramatically changed the global economic landscape, especially in East Asia, this should not be feared by Asian economies. China’s rapid economic growth, Yap said, is actually a source of opportunities in three aspects: trade, investment, and regional economic integration in East Asia. Between 1995 and 2006, trade between the larger ASEAN countries and China (and likewise Japan) has grown so rapidly (Table 1). Yap remarked that this reflects the impact of the “rise of two-way trade in manufacture” and the “growth of global production sharing.” For its part, the Philippines continues to enjoy a favorable trade balance with China. Over the last 10 years, total trade has been growing by an average of 24 percent (Table 2). In particular, the rise of manufacturing exports to China shows how the latter’s economic growth is benefiting the Philippines. In 2005, the total value of Philippine electronic exports stood at US$27.9 million; of this, US$3.5 million worth of exports went to China. The Philippines is also expected to benefit from increased foreign direct investments

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Table 1. Share of China in ASEAN-5 exports and imports (in percent) 1995 2000 2006 Exports Imports Exports Imports Exports Imports Indonesia 3.80 3.70 4.46 6.03 7.59 11.37 Malaysia 2.60 2.20 3.09 3.94 7.25 12.18 Philippines 1.20 2.30 1.74 2.28 9.83 7.13 Singapore 2.30 3.20 3.90 5.29 9.75 11.41 Thailand 2.90 2.80 4.07 5.45 9.03 10.60 Japan 5.00 10.70 6.35 14.53 14.35 20.47 Source of basic data: International Monetary Fund Direction of Trade Statistics (DOTS) CD-ROM, 1995; DOTS online database, July 2007. Table 2. Philippine trade with China (F.O.B. value in million US dollars) Year Total Trade Exports to Imports from Trade Surplus 1995

869.308

China 208.933

China 660.375

-451.440

1996 1997

981.000 1216.892

328.000 244.412

653.000 972.480

-325.000 -728.070

1998 1999

1542.613 1614.599

343.683 574.809

1198.930 1039.790

-855.250 -464.980

2000 2001

1449.244 1767.777

663.290 792.757

785.954 975.020

-122.660 -182.260

2002 2003

2607.560 3942.150

1355.830 2144.650

1251.730 1797.500

104.100 347.150

2004 2005

5312.410 7049.270

2653.040 4076.680

2659.370 2972.590

-6.330 1104.090

2006

8289.450

4617.330

3672.120

945.210

Source: International Monetary Fund Direction of Trade Statistics, 2007.

(FDI) from China. Yap noted how China is gradually emerging as a major source of FDI and foreign aid in Southeast Asia. Figures from the UNCTAD 2006 World Investment Report show that China’s FDI to ASEAN rose from US$137 million in 1995 to US$226 million in 2004. But this is only the beginning. In the case of the Philippines, China’s Exim Bank promised a package of US$2 billion every year for the next three years. Said amount is reportedly earmarked for the Arroyo administration’s ambitious infrastructure program. Fostering ties with China also offers a valuable opportunity for the ASEAN in nurturing regional economic integration in East Asia. Such integration poses significant political and economic gains. As Yap explained, “A free trade agreement among countries in the region will boost the political bargaining power of the countries involved by sig-


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July-August 2007

Cagayan de Oro Chamber of Commerce president Elpidio Paras was among those who expressed optimism at the potential gains from the PhilippinesChina agreement.

naling that they have agreed to band together to pursue common interests. Having China on its side will definitely enhance the political stature of ASEAN and vice versa.� As expected, however, other participants in the forum were less hopeful especially when Medalla discussed the possible short-term impacts of the agreement. Citing a simulation exercise, she named the vulnerable sectors or the ones most likely to be affected when the EHP takes effect. These are the sectors of vegetables, hog, meat, and meat processing. Assistance to these sectors, Medalla thus emphasized, are highly necessary either through technological support or through product diversification to make them more efficient. Admittedly, small farmers and producers endure the most of the unintended damaging effects of trade liberalization due to poor access to credit, technology, and other support services. It is but proper that their welfare is considered in discussions on free trade agreements. Ample support and appropriate social safety nets should also be put in place to protect them.

Liberalization should be complemented by the right mix of socioeconomic policies and programs that will assist producers gain international competitiveness as well as create an environment conductive to trade and investment. To achieve this, Medalla said, entails investment in rural infrastructure (transportation, telecommunications, postharvest facilities), investment in productivity, particularly research and extension activities for small farmers and producers, well-defined land policies, financial services tailored to farmers’ needs, and meaningful and sustainable governance reforms. Sharing the same view, Yap underscored the urgency of setting the conditions for faster economic growth to take advantage of the economic opportunities that China provides. A climate conducive for domestic and foreign investments is a must and this largely implies better physical infrastructure. Another important aspect, Yap said, is crafting a coherent industrial policy—one that will facilitate the growth of business in an open and competitive environment with the government playing a strategic and coordinating role. SVS


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July-August 2007

PIDS, UNICEF tie up for policy studies af fecting children affecting

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he Philippine Institute for Development Studies (PIDS) and the United Nations Children’s Fund (UNICEF) have tied up to conduct a series of public policy seminars on the rights of the Filipino children. The first topic in the series, “Who Benefits from the Food-for-School Program (FSP): Lessons in Targeting,” was presented on June 28 at the C.P. Romulo Hall of the NEDA sa Makati Building by Dr. Rosario G. Manasan, senior research fellow at PIDS. The paper presented an assessment of the benefits from the FSP, a multi-agency program under the hunger mitigation initiative of the government. Under this program, Grade I and Day Care pupils from the schools maintained by the Department of Education (DepEd) and Department of Social Welfare and Development (DSWD), respectively, are rationed one kilo of rice a day. Target beneficiaries are public elementary students in Metro Manila, Sulu, Tawi-Tawi, and selected schools in 49 poor provinces.

FSP makes use of the Food Insecurity and Vulnerability Information Mapping System (FIVIMS), which, according to Dr. Manasan, is based on outdated information, as the data used to construct it are at least six years old. She suggested exploring more efficient targeting mechanisms that make use of more recent data, such as the Family Income and Expenditure Survey (FIES). Discussants from the National Nutrition Council, UNICEF, and DSWD presented their respective agencies’ take on the issues surrounding the FSP. While they presented different perspectives on the issue at hand, they all agreed that there is a need for improved targeting criteria and mechanism, which can dramatically resolve the leakage and undercoverage problems of the program. MAAG

The discussions focused on the question “who benefits from the FSP?” According to Dr. Manasan, the answer to this question has a large bearing on both the effectiveness of the program as well as its efficiency, and it largely depends on the targeting mechanism used. In this respect, targeting means correctly identifying which households are poor and which are not. In her presentation, Dr. Manasan described the key features of the FSP, its coverage, targeting mechanism, and the problem on leakage (inclusion of nonpoor beneficiaries). As stated in the paper, the

The first seminar in the series was attended by representatives from different agencies. From left: Ms. Maria Bernardita Flores of the National Nutrition Council, Mr. Colin Davis of UNICEF, Dr. Josef T. Yap of PIDS, Dr. Nicolas Alipui of UNICEF, Dr. Rosario Manasan of PIDS, Mr. Marinus Gotink of UNICEF, and Assistant Secretary Ruel G. Lucentales of the Department of Social Welfare and Development.


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July-August 2007

PIDS launches two new PIDS Corners in Region 10

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he Philippine Institute for Development Studies (PIDS) has recently launched two new corners in Region 10, one at the NEDA Region 10 office in Cagayan de Oro City and another at the library of the Bukidnon State University in Malaybalay City. The PIDS Corner is one way of sharing knowledge and information that could help in setting conducive conditions for faster economic growth.

The PIDS Corner at the NEDA-10 office is being housed in its Knowledge Center and was inaugurated on June 19, 2007. Through this Corner, the PIDS publications are now made available and more easily accessible to the public in the region. Prior to the launch, a program was held wherein representatives from various regional offices of government agencies and research and academic institutions as well as from the media were invited. Director Casimira V. Balandra of NEDA -10 gave the welcome remarks and the rationale for the

PIDS president Dr. Josef T. Yap and NEDA Region 10 Director Casimira V. Balandra led the ribbon-cutting of the newly established PIDS Corner at the NEDA-10 Knowledge Center.

launching of the PIDS Corner. She said that in today’s knowledge age, stakeholders should more aggressively share knowledge with one another in order to sustain the economic gains that the region has achieved. The setting up and inauguration of the PIDS Corner, with its rich sources of knowledge and information through its various studies, is a step toward this direction. PIDS president, Dr. Josef T. Yap, meanwhile, presented some statistics showing the closer economic integration among countries in the ASEAN region but sadly noted that there has to be greater efforts, on the other hand, to achieve an equally closer integration among regions within the country (Philippines). He stressed the need to be more responsive to the local needs of the regions and provinces and informed the audience that PIDS is currently developing an analytical framework or template on the

Another PIDS Corner was launched at the Bukidnon State University in Malaybalay City, with BSU president Dr. Victor M. Barroso and Dr. Yap leading the ribbon-cutting.


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During the launching program, Dr. Barroso said the establishment of the PIDS Corner in their library was a good development that coincided with the BSU’s new stature as a state university. Inset shows Dr. Yap citing the importance of knowledge and information sharing in the era of globalization which the PIDS is taking part in through its various PIDS Corners.

use of research and data for better local development planning which it wants to share with local government units in their policymaking and decisionmaking processes. Meanwhile, on June 21, 2007, in collaboration with the Bukidnon State University (BSU), another PIDS Corner was launched at the University’s library in Malaybalay City. The occasion was attended by some of the BSU faculty, students, and invited guests. The launching program was opened by Dr. Victor M. Barroso, President of the Bukidnon State University. He said that the University is honored to have been selected to house a PIDS Corner in their library and that it is a good development that coincides with its new stature as a state university. Dr. Josef T. Yap, for his part, emphasized that the Philippines and other ASEAN countries have to set the appropriate conditions for faster economic growth in order to take advantage of the opportunities provided by

globalization. Sharing of knowledge and information through various studies and publications is one of the mechanisms to achieve this. In this sense, PIDS is contributing its share in this endeavor through its various PIDS Corners. During the launch of the two Corners, Ms. Marilen Macasaquit of the PIDS’ Project Services and Development Staff also presented the PIDS web resources, their uses and/or applications. She noted that the Institute set up its website as early as in 1994 as a response to the need to project its work as the premier think tank of the Philippine government. With the modern trends in technology, the PIDS saw them as an opportunity to have its research outputs more widely disseminated to its various publics. Ms. Macasaquit also discussed the different databases that the Institute currently maintains as well as the Institute’s module on publications. VVT

July-August 2007


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DEVELOPMENT RESEARCH NEWS

July-August 2007

Good things come in two’ s for PIDS! two’s

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n August 8 at the Sulo Hotel in Quezon City, the PIDS received an award from the Commission on Audit for its successful implementation of the Electronic New Government Accounting System (e-NGAS). In particular, PIDS was recognized and cited for having the shortest rollout period among the agencies in the government corporate sector and for having the most updated generated financial statements.

Notable performance in the e-NGAS. PIDS President Dr. Josef T. Yap receives the award from Chairman Guillermo N. Carague of the Commission on Audit. Also present in the ceremony are Ms. Andrea Agcaoili, PIDS Director for Operations and Finance (fourth from left), and Ms. Minerva Lachica, Division Chief of the Accounting Division (third from left).

The implementation of the e-NGAS is envisioned to standardize recording and reporting of government financial transactions, consolidate the financial reports of the different government agencies, align government accounting system with the international standards in accounting and financial reporting, and ensure accountability and transparency in management. DRN

T

he PIDS book Winning the water war: watersheds, water policies and water institutions, edited by Agnes C. Rola, Herminia A. Francisco, and Jennifer PT. Liguton, was honored as one of the 2007 Outstanding Books in the social sciences division given by the National Academy of Science and Technology (NAST). PIDS published the book with the Philippine Council for Agriculture, Forestry and Natural Resources Research and Development (PCARRD) under the Sustainable Agriculture and Natural Resource Management Collaborative Support Program (SANREM) funded by the United States Agency for International Development.

2007 Outstanding Book Award. Editors Agnes C. Rola and Jennifer P.T. Liguton received the award from NAST President Emil Q. Javier and Academician Ledivina Cariño, both former members of the PIDS Board of Trustees.The other volume editor, Herminia Francisco, was out of the country and unable to attend.

The awarding took place during NAST’s 29th Annual Scientific Meeting. For this year, the theme was “A progressive Philippines anchored on science: building a culture of science in the Philippines.” Notable leaders and personalities from the academe and government agencies that have continuously worked together to promote science and technology as driver for Philippine growth graced the affair on July 12 and 13 at the Manila Hotel. DRN


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July-August 2007

Frequently asked questions about Bird flu

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n recent months, new cases of bird flu in some Asian countries have been reported anew. So the public may be informed about the nature, causes, symptoms, and prevention of bird flu, the DRN is hereby helping in the information campaign about it.

What is bird flu? Bird flu or avian influenza (AI) is a contagious disease of birds ranging from mild to severe form of illness. Some forms of bird flu infections can cause illness to humans. What causes bird flu? Bird flu is caused by an influenza A virus. The outbreaks affecting some Asian countries have been caused by influenza A/H5N1 virus. It can also cause severe infection in humans. What are the signs and symptoms of bird flu in chicken? * Swelling of legs * Sneezing, cough, nasal discharge, fever, weakness, diarrhea, loss of appetite, swelling, excessive thirst * Turning of crown and wattle into purple * Ruffled feathers * Sudden death What are the signs and symptoms of bird flu in humans? Following exposure to a bird flu-infected chicken, patient develops: * Fever * Body weakness or muscle pain * Cough * Sore throat * Difficulty of breathing in severe cases * Sore eyes How is bird flu transmitted in chickens and other birds? * Direct contact with discharges from infected birds, especially feces and respiratory secretions * Contaminated feeds, water, cages, equipment, and clothing * Broken contaminated eggs

How do we prevent bird flu from entering the country? * Ban the importation of live chickens and other poultry products from countries affected with bird flu * Ban the importation of cage and pet wild birds from countries affected with bird flu * Monitor daily the major entry points open to international routes and prevent the entry of any bird species coming from affected countries * Monitor areas where migratory birds congregate. What should the general public do? * Wash hands thoroughly with soap and water before and after handling live and dressed chicken. * Cook chicken thoroughly. * Do not sell live chickens and other birds in the market while there is a threat of bird flu. * Do not let chickens roam freely. Keep them in cages or pens. * Do not place chicken, ducks, and pigs together in one area, cage, or pen. * Do not catch, get near, or keep in captivity wild birds. * Report to the nearest agricultural/veterinary office any unusual death or illness of chickens and other birds. * Report to the nearest local health centers any case of respiratory illness with history of exposure to sick or dead chickens and other birds. Is it safe to travel to countries affected with bird flu? Individuals at risk are those directly or indirectly exposed to sick chicken and other birds. The government thereby advises prospective travelers to countries affected with bird flu not to go to bird parks, poultry farms, and markets where live chicken and other birds are sold.

How is bird flu transmitted to humans? Through inhalation or contamination with infected discharges or feces of sick chicken. One DOES NOT get bird flu from thoroughly cooked chicken meat. There is No EVIDENCE of transmission of the virus to humans from raw, chilled, or frozen poultry foods. What is the treatment of bird flu in humans? Treatment is the same as for other influenza viruses.

For more information, contact: DOH Bird Flu Hotline: Call 155 (Smart Celphone) http://home.doh.gov.ph * http://www.doh.gov.ph DA Bird Flu Hotlines: (02) 925-9999 / (02) 928-2836 www.birdflufreephilippines.com Source: Bird flu basic information for the general public brochure, Department of Agriculture.


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DEVELOPMENT RESEARCH NEWS Vol. XXV No. 4

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the PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES projects and important policy issues discussed during PIDS seminars.

ISSN 0115 - 9097

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DEVELOPMENT RESEARCH NEWS is a bimonthly publication of (PIDS). It highlights the findings and recommendations of PIDS research

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July-August 2007

Reentered as second class mail at the Business Mail Service Office under Permit No. PS-570-04 NCR.Valid until December 31, 2007. Annual subscription rates are: P200.00 for local subscribers and US$20.00 for foreign subscribers.All rates are inclusive of mailing and handling costs. Prices may change without prior notice.

A. Godes, Necita Z. Aquino and Alejandro P. Manalili, Circulation and Subscription; Ma.Aileen A. Garcia, Layout.

Editor's Notes...from p. 1 ○

and Japan. At first glance, this could be a case of the rich helping the poor, yet a meticulous scrutiny will show that it is more of a mutually beneficial partnership where everyone will reap the benefits in the long run. Related to this is the forging of a regional financial and monetary cooperation in East Asia, similar to what the European Union is doing for its region. With sound policies and the needed structural reforms, Asian countries will be made more capable to combat any crisis if they can act as one macroeconomic region. Fostering ties among countries in the region through free trade agreements can pave the way for regional economic integration. Zooming in to the local front, one form of economic integration can be exemplified by the ongoing free trade agreement between the Philippines and China. Also in this issue, one feature article describes what the Philippines can potentially gain as it enters into a free trade agreement with China. While it is a fact that China is considered as an economic giant, our local economists say that it should not be feared; instead, it should be treated as a vast source of opportunities where the Philippines, with the right mix of technical and policy support, can find a niche in. While it is natural for our local agriculture sector to initially have qualms about entering into this agreement due to the short-run impacts it will cause, it will still be to the country’s advantage if we will be able to penetrate the Chinese market early on. With the government’s support in terms of building the strength and competitiveness of our local industries, clearly, we can look ahead to a more stable economy that is at par with that of our neighbors’.

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