Page 1

Vol. VI, No. 2

March-April

UPDATE" •

SEMINARS

1988

ISSN

In this issue of the Development Research News (DRN), we are starting the Research Folio Series which features extended research summaries of studies con-

au,ed by,.e.',.,,,....e lnt.te 'e,opment ..esummaries which provide the highlights, policy implications and recommendations of each study,

PIDS-ISEAS WORKSHOPDISCUSSION ON PHILIPPINE "_ _DE POLICY OPTIONS

he Philippine Institute for DevelopR ment Studies (PIDS), together with rathe Institute of Southeast Asian Studies (ISEAS), sponsored the third session of a 3-part series of seminarworkshops on "ASEAN Trade Policy Options" on April 14, 1988 at the Manila Mandarin Ballroom. The first two sessionswereheldin 1987. During the April seminar, the study conducted by Dr. Floriart A. Alburo, Dr. Erlinda M. Medalla and Dr. Filologo Pante, Jr. on "Philippine Trade Policy n_,*_ons" was presented. At the same ,I the discussion revolved on a range o}'-trade issues pertamhag to the Philippine participation in the forthcolning Uruguay Round of GATT-MTN Talks.

will also appear occasionally in forthcoming issues of the DRN. Other issues of the DRN, however, will still feature contemporary issues written by guest writers. For the current issue, three (3) research summaries on foreign trade barriers, public sector deficit and informal credit markets are featured. ]he first study tries to determine the possible impact of" non4ariff measures on Philippine exports to the country's major trading partners, viz., European countries, Japan and the United States. This is part of a larger study co-sponsored by PIDS wirh the Asian Development Bank (ADB). The study is conducted jointly by ti'rlinda M. Medalla and Gwendolyn Tecson, Research Fellow at PIDS and Associate Professor at U.P. School of Economics, respectively. Through the presentation of a consistent series of consolidated public sector deficits, the second study, by Rosario G. Manasan, Research Fellow at PIDS, tries to document the size of the government deficit from 1975-1984. The third summary is co-authored by Mario B. Lamberte and Ma. Theresa Bunda, Vice-President of PIDS and Graduate Student of Asian Social Institute, res. pectively. This study shows the operations of the in/brrnal credit markets (ICMs) in a low-income urban community, namely, Sapang-Palay. The paper focuses on the major participants and size of lCMs and the structure and role of lCMs in savings mobilization. This paper is part of a larger project by the Social Weather Stations on the ICMs in the Philippines, sponsored by the ADB through the PIDS. Finally, this issue contains the usual UPDATE section consisting ofnewpublications and seminars sponsored by the Institute and other institutions.

It was argued that since the Philippines' economic quite dependent on trade, itstructure would beis beneficial for the

WORKSHOP ON AGRICULTURAL

country to actively participate in the forthcoming round, specifically in formulating codes and negotiation roles in the conduct of world trade. Furthermore, there is considerable importance attached to the new issues such as selvices, a proposed agenda item in the New Round. The discussion also lined up top priorities for the Uruguay Round. These are issues on tighter rules, elimination and rollback of non-tariff measures (NTMs), removal of subsidies, and integration of all products into GATT. []

A workshop on "Agricultural Statistics" was held on April 19, 1988 at the Operations Room of the NEDA sa Makati Building. Sponsored by the Philippine Institute for Development Studies (PIDS), the workshop aimed to determine tl_e requirements of users for agricultural statistics and to identify the problems and issues related to the generation and dissemination of said statistics. The discussion and the ideas generated from the workshop wcrc deemed useful for the "Task Force to Review Similar Surveys

I

0115-9097

II '1

STATISTICS

?. "Tlill

..... _ _I_IttN_IIlI#__

of the Bureau of Agricultural Statistics (BAS) and the National Statistics Office (NSO)", in coming up with concrete recommendations that would rationalize the conduct of the various surveys by BAS and NSO. An overview of suweys conducted by the two agencies was presented by NSCB Secretary-General Pablo Q. Samson after the opening remarks by Department o1!Budget and Management Undersecretary Benjamin E. Diokno, Chairman of the Task Force. After the overview, participants in the workshop were divided into th.ree groups; (Continued on page 10)


DEVELOPMENT

RESEARCH NEWS

MARCH-APRIL

PIDS and Deputy Director.General of the National Economic and Development Authority (NEDA); DENR Undersecre-

SEMINARS

and Rolleo lgnacio; Dr. Edwin Magallona, Vice=Chancellor of the University of the taries Celso R. Roque, Victor V. Ramos Philippines at Los Bafios (UPLB); and DENR Assistant Secretary Roque Magno who served as the moderator. Im

2_

NEW

1988

PUBLICATION

HOW PARTICIPATORY IS PARTICIPATORY DEVELOPMENT? A REVIEW OF THE PHILIPPINE EXPERIENCE (Second Printing, 1988; First Printing, 1983) Gelia T. Castillo

._ __-_ _

SEMINAR ON "UP LAND RESOURCES POLICY" The "Upland Resources Policy Conference", jointly sponsored by the Philippine Institute for Development Studies (PIDS) and the Department of Environment and Natural Resources (DENR), was held on March 14,1988 at the Operations Room of the NEDA sa Makati Building. The one-day policy conference, withthe theme "Toward a Framework for Upland Resources Policy", highlighted the issues, methodologies and policy recommendations generated by the studies under the recently-completed

Up-

land Resource ResearchoutProgram. These studies Policy were carried by researchers based in various units of the University of the Philippines at Los Bafios. Preliminary workshops had been convened to discuss these studies. This particular conference focused on specific resource management issues and assessment methodologies, The studies taken up in the conference included "Upland Population and Migration Patterns: Estimation Methods and Policy Issues" by Ma. Concepcion J. Cruz; "Soil and Water Conservation Planning: Policy Issues and Recommendations" by Wilfredo P. David; "The Environmental Cost of Soil Erosion in the Pantabangan and Magat Watersheds" by Wilfrido Cruz; "The Private Costs of Commercial Forestry Reibrestation and

Social Forestry" by Marian S. Delos Angeles, Cerenilla Cruz and Eumelia Corpuz; and "Forest and Upland Resource Management: A Policy Framework" by Wilfrido Cruz and Marian S. Delos Angeles_ Among the participants in the program were Dr. Filologo Pante, Jr., President of 2

i

I

IIIlilill

//Z

_ /_-_

___. -.- __.__. _ _---_ _ '\ /__._

___(':___ '_

_.___-_ _, _j_._._j_/\\ {_

INTERNATIONAL SYMPOSIUM ON TIlE DEVELOPMENT AND MANAGEMENT OF ENERGY RESOURCES T

he Philippine Association for the Advancement of Science, Inc_ 1 (PHilAAS) in cooperation with the " Office of Energy Affairs (OEA), the Industrial Technology Development Institute (ITDI), and Philippine Council for Industry and Energy Research and Development (PCIERD) will sponsor an International Symposium and Exhibit at the Manila Hotel, Manila, Philippines on January 26-28, 1989. The symposinm and exhibit is open to all individuals, corporations, as well as government and professional organizations involved in various fields of energy development and management, Topics covered are: a.) Environmental Aspects of Energy Development and Utilization; b.) Industrial Energy Management; c.) Geothermal Energy;

Professor, Rural Sociology University of the Philippines at Los Batios

experience in participatory development strategy and deals with a number of contemporary and controversial issues regarding Philippine rural developme_nt. It looks into two importantThedevelopment; study reviews aspec._Philippin rural namely:therural ins_m,tions and people's participation. The former is about the changes undergone by institutions, social organizations and relationships among the actors in this setting. The first part of the study is devoted to a review of these changing rural institutions such

as "Samahang

Whether the changes in these institutions result from social, economic and political fluctuations that take place over time (e.g., relationship between farmer and hired farm-labor or landlord-ten_£pt relationship) or are deliberately desl and created, they nonetheless form an important part of the Philippine rural setting. An understanding of the dynamics involved is necessary in fully cornprehending rural development. The other aspect explored in the study is people's participation, e.g., what constitutes participation; who the people are and who should participate, and the degree of interestinpublicparticipation. •

_ _/,_

g.) Solar Thermal Energy Conversion; h.) Biomass Energy; i.) Photovoltaic Systems; j.) Wind Energy Conversion

II

compact

farms andland "seldas", "Masagana and changing and labor relations 99" in agricultural production.

d.) Coal Combustion and Utilization; e.) Coal Gasification and Liquefaction; f.) Conventional and Small Hydropower;

(Continued on page 9)

Nayon",

l I


A summary

of a research

THE FINANCIAL LOW-INCOME

study conducted

by the Philippine

MARKETS

URBAN

Institute

IN

Consequently, the policy prescriptions derived from such analyses are often irrelevant to the needs of LDC economies. This paper attempts to show the operations of the informal credit markets (ICMs) in a low-income urban Filipino community, viz., Sapang Palay. Specifically, this paper focuses on the major participants and size of ICMs, and the structure and role oflCMs in savings mobilization. Located in the outskirts of Metro Manila, Sapang Palay covers 752 hectares 1 is one of the poorest resettlement •a_reasm the Philippines. It is occupied by governmentS°me 86,000 squatter fami!ieSprojectsaffected by urban areas. infrastructure in

Studies

offervarious

:Moneylenders payment schemes to different borrowers to suit the

COMMUNITIES:

latter's needs and paying capacity. Oneis called "steady" wherein the interest on principal is paid every month. Borrowers of this type are mostly business

THE CASE OF SAPANG PALAY informal credit markets (ICMs) ry little their has been writteninabout the despite prevalence the economies of LDCs. This is probably due to the imported economic theories applied LDCs. Applicators of such theories assume that the features present in advanced economies also exist in I_DCs.

for Development

the

(78pages) Working Paper Series No. 88-05 Mario B. Lamberte, Vice-President, PIDS and Ma. Theresa Bunda, Graduate Student Asian Social b_stitute

The second and most popular payment men whoisare "suki" of the moneylenders. .scheme called "revolving_' where loans have definite maturity dates. "Balik-

OPERATIONS OF INFORMAL MONEYLENDERS

bayan" (returnees) is the third payment scheme where borrowers have a credit line with moneylenders without a preestablished maximum credit line. Most loans granted have maturity periods between 16 to 60 days but not more than

The density ratio for informal moneylending in Sapang Palay is one moneylender to 860 households. A high-risk business, moneylending depends upon the paying capacity mad repayment record of borrowers. Thus, moneylenders tend to favor prime clients called "suki" in Tagalog. This lowers the transaction costs and risks involved in

90 days, and are less than P2,000.00. There are, however, also relatively bigger loans such as P10,000.00 or more. Moneylenders do not charge service fees. Their interest rate structure also differs, which shows lack of competition and market segmentation inasmuch as there is an excess demand for credit. Moneylenders usually use their own capital for lending operations. However,

lending,

they may also mobilize deposits, and the CHARACTERISTICS OF THE SIX "PALUWAGAN" UNITS (Sapang Palay)

:

, ' "")"

Three major participants in the finam cial markets are identified, viz., the informal moneylenders, popularly known as "5/6" lenders; the rotating and credit associations (ROSCAS), called "paluwagan" in Tagalog; and the traders/supliers. Almost all of the traders/suppliers are East Indians ("Bombay") and hve outside of Sapang Palay. This prevented

' • , i. 'Date started

i" !!t :" i _ ,,

A

B

...... :..... Paluwagml units C D 3 May 1987 weekly

E

24June 1987

8 March 14June 1987 1987

2. Froqueney of contribution 3. Valueofone share (_ 4. Total number of shares

daily

weekly

daily

20,00

100.00

140.00 . 350.00

70

20

34

28

19

the researchers from including an indepth study of their role in the financial markets of the resettlement area, thus

_$,.,.Lotor"sahod" (t) 61.Number of members

1,400

2,000

4,760

9,800

38,000

22

16

26

24

18

leaving the informal moneylenders and the "paluwagan" as the primary sources of information.

'_,1 core membets .'._2, ' new members

18 4

12 4

24 2

7 17

6 12

F

15 March 1987 bi.monthly

30April 1987 monthly

2,000.00

3,000.00 15 '_ 45;000 10 10


IIIIIII

I

IIII

I

Ii

success of this activity depends on the attractiveness of their deposit instruments to low-income earners. In Sapang Palay, one moneylender has been successful in accepting time deposits for as low as P100.00, carrying an interest rate of 80 percent per annum. This is an opportunity not provided by banks, whose minimum time deposits is P5,000.00, an amount way above what low-income earners can afford. High lending rates charged by moneylenders do not necessarily guarantee them high profit rates because of the very high transaction costs and cost of funds they shoulder relative to their counterparts in the formal credit markets. It is surprising to observe that clients do not

A small number of members is mainrained, especially for those units whose price per share is relatively large, to make "paluwagan" manageable. Members of the "paluwagan" include the core membe:rs and the new members. The former are members of the same unit for five years and whose manager is also the one

transfer to moneylenders who charge relatively lower lending rates in an effort

managing the present "paluwagan", while the latter are recruited and guaranteed by

sources of credit, the largest of which are the traders/suppliers and moneylenders.

to eventually bring down the lending rates of other moneylenders. Because of the wide dispersion of lending rates among :moneylenders and the lack of mobility among clients to shift from one moneylender to another (which reveals a fragmented capital market), respondents admitted that they do not see each other as competitors,

the core members. The manager is usually one of the well-respected and trustworthy members of the cmmnunity. The most important factor that motivates one to manage a "paluwagan" is having the first turn in each cycle which is important because implicit interest in the first turn is the highest. Succeeding turns are determined by lottery. However, the manager can use his own discretion in giving prior-

Interestingly, the latter offer the loft[ maturity period for their loans. "Pal_.._gaff" members also extend credit :in the form of consumer items or cash to others. Joining a "paluwagan" is actually a saving-investment decision. The presence of a wide variety of "paluwagan" helps non-weekly households/investors overcome the problem of indivisibilities in investment and assure a consumption

PALUWAGAN, A ROTATING SAVINGS AND CREDIT ASSOCIATION

ity to those who are in dire need of cash for hospital bills, etc. A member may be admitted for half or a quarter of a share while the manager may look for other members to assume the remaining part. When a member defaults before receiving his sahod, the entire contribution is given back to him. Then the manager assumes the abandoned share,

pattern that is consistent financial capacity.

The other form of informal credit institution existing in Sapang Palay is the "paluwagan", a form of ROSCAS (rotating savings and credit association). The lot or prize amount ("sahod" in Tagalog) is rotated among members of the "painwagan" unit by lottery and the "sahod" depends on the value of one share and the number of subscribed shares. For example, if one share is valued at 1'20.00 and there are 30 subscribed shares, then one "sahod" amounts to 1_500.00. Assuming that each member has one share and that the installment or contribution is made on a daily basis, then each day, one mereber receives a "sahod" equivalent to P600.00 minus his contribution for that day. At the end of the cycle, each member shall have already received and raised the same amount of money. The basic characteristics of a "paluwagan" as seen from the six (6) paluwagan units considered in this study are shownin the Table.

Illll

"lttgh lending rates do not neces_arily guarantee money-lender_ high profit rates because of the high trans, action costs they shoulder relative to their eotmterparts in the formal credit markets."

When a member defaults after receiving tire "sahod", meanwhile, the manager assumes the defaultees' liabilities so that the "sahod" would not decrease in the succeeding terms. In order for members to receive their entire "sahod" on time, managers advance their own money to fill the gap. To minimize defaults, the most enterprising manager requires members to sign a written contract attested to by a lawyer. The attorney's fee, fixed at 5 percent of the value of the contract, is shouldered by the manager, Membership in the "paluwagan" is by recruitment. Respondents who join "paluwagan" considers the amount and

I I

Illll

frequency of contribution, and personal knowledge of the manager and of the majority of the members as the deciding factors. Respondents join "paluwagan" to finance family-owned business, to save, to pay old debts, to raise funds for household consumption, and to avoid borrowing from moneylenders. About 95 percent of the members pay their contribution from their current income. On the average, respondents have joined a "paluwagan" six times during the past two years. Most "paluwagan" mem_ bets have savings deposits in the banks. A significant relationship, however, does not exist between income and levels of deposit. "Paluwagan" members have other

with their

CONCLUSIONS The above points seem to chaUenge the conventional wisdom which states that no financial savings can be mob_ in low-income communities_ The pres of an instrument that exacts low transaction costs on the part of the participants and offers attractive returns can tap those savings. ICMs exist almost everywhere in the Philippines and should not be underestimated. Yet it does not find its way into the official statistics published by the Central Bank and other government agencies. Researchers using the published financial statistics should be aware that they are getting only a partial picture of the country's financial _stem. Efforts should therefore be exerted to compile financial statistics that reflect the over-an' features of the country's financial system. This paper shows some possibilities in obtaining information from the ICMs. []

I

I

Illl


summary

of a research

study

documents the size of the deficit from 1975-1984 the presentation

of a con-

consolidated public sector government, local governgovernment corporations) period• The manner by government has chosen to fiscal deficit in the given economic consequences government expenditures Table 1 presents the consosector investment and 1975-1984 wine Table 2 financing of public sector 1975-1984 in million pesos, the paper analyzes the the fiscal deficit on public domestic), interest rate, formation, money creation, and last part of the paper is

conducted

by the Philippine

Institute

for Development

Studies

]'HE SIZE, FINANCING AND IMPACT OF THE PUBLIC SECTOR

crisis in 1983, which consequently resulted in massive devaluation in the

DEFICIT,

same year.

1975-1984

Working Paper Series No. 88-03{38pages) Rosario G. Manasan Research Fellow, PIDS devoted to a summaiT of the lessons that can be drawn from this experience, Evident from the analysis is the inability of the government to choose th.e right mix of financing instruments for the period 1975-1984. For instance, foreign borrowings used to finance the government's expansionary expenditure program in 197%1982 proved to be unsustainable as the pubhc sector deficit increased to an unmanageable size. Similarly, money creation activities by the government in the 1980s served to contribute to the balance-of-payments (BOP)

Deficit fmmrcing in 1984-85, on the other hand, resulted in 'the crowding-out of private investments and the substantial increase in interest rates. These results suggest the need for government to be cautious in choosing ways to finance its deficit. Specifically, consistent fiscal, exchange rate and monetary policies are • required. Moreover, the government needs a conservative financial policy to implement measures aimed at hnproving the resource mobilization pertbrmance of the public sector, e.g., inaprovement in tax administration and tax structure, increased efficiency in internal cash generation of government corporations, and streamlining of government operations to cut down on unnecessary costs. •

TABLE 1. CONSOLIDATED PUBLIC SECTOR INVESTMENT AND SAVINGS, i975-1984 (In million pesos) TOTAL PUBLIC SECTOR Yea[ 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1975-1984

NATIONAL ;OVERNMENT

Investment

Savings

I-S Gad

8179.87 20533.85 14419.16 14730.20 21796.55 21712.98 41399.75 32915,95 33559.19 43096.71 252344.21

4177.94 4434,39 5153.24 7934.76 12607.02 14637,87 14699,13 12830.50 17693.55 19557.51 113725,91

4001.93 16099,46 9265,92 6795.44 9189.53 7075.11 26700.62 2008S.45 15865_64 23539.20 138618.30

invesment -a/ 2949.51 2987.61 3005.64 4888.08 5468.fr8 8788.57 13973,44 12292.40 12813.57 10849.00 78016,40

Stvlnss b_[ 3729.32 3746.06 4040.02 7236.36 11770.75 13291.54 12349.81 10100.60 15234.54 19956.06 101455.06

LOCAL GOVERNMENT I-S Gad -779.81 -758.45 -1034.38 -2348.28 -6302.17 -4502.97 1623.63 2191,8 -2420.97 -9107.06 -23438.66

Investment 321.00 3.61.00 386.00 390.00 449.00 532,00 659.00 697.00 829.00 891,00 5515.00

Savings c/ -531.00 -628.00 -548,00 -617,00 -807.00 -871.00 -965.00 -1473.00 -1741_00 -2119.00 -10300.00

I-S Gad 852.00 989.00 934.00 1007.00 1256.00 1403.00 1624,00 2170.00 2570.00 3010.00 15615.00

Ratio to GNP (%) 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1975-1984

(Ave.)

7.15 15,30 9.41 8.32 10.00 8.21 13.64 9,81 8.86 8.19 9.68

Excludes equity contribution,

3.65 3,30 3.36 4_48 5.78 , 5,53 4,84 3.83 4.67 3,72 4.36

3,50 12.00 6.05 3.84 4.21 2,67 8.79 5.99 4.19 4.47 5.32

2.58 2.23 1,96 2,76 2.51 3.32 4.60 3£6 3.38 2.06 2.99

3.26 2.79 2.64 4.09 5.40 5.02 4_07 3,01 4.02 3.79 3.89

-.68 -.57 -,67 -1,33 -2.89 -1.70 .53 .65 -.64 -1.73 -.90

.28 .27 .25 .22 .21 .20 .22 .21 .22 .17 .21

net lending to 58 PSEs included in consolidation.

Includes national government subddie,

to othex levels of government included in consolidation.

Excludes national government sub.'ddies. Sources:

Nattonal and local government data came from Ministry of Finance Government corporation data came from Government Corporate Monitoring and Coordinating Committee

(GCMCC).

-.46 -.47 -.36 -.35 -.37 -.33 -.32 -.44 -.46 -,40 -.40

:74 34 .61 .57 - .58 _53 .53 .65 .68 .57 .61


II

III

TABLE

1: CONSOLIDATED

PUBLIC

SECTOR

INVESTMENT (In million

PUBLIC

SECTOR

TOTAL PSE's Year

Investment

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1975-1984

4909,36 17185.24 11027.52 9452.12 15878.97 12392_41 26767,31 19926.55 19916_62 31356,71 168812.81

4.29 12,81 7.20 5.34 7.28 4.68 8.82 5.94 5.26 5_96 6.48

AND

FSGao

Investment

Savings

979,62 1316.33 1.661.22 1315.40 1643_27 2217.33 3314.32 4202.90 4200,01 1720.45 22570,85

3929_74 15868,91 9366.3 8136.72 14235.7 10175,08 23452.99 15723.65 15716.61 29636_26 146241.96

469.54 1704,56 556.37 25.66 1030.46 -4132.09 3097.93225.74 474.01 6676.76 10128.94

604.89 932.06 1136.24 1278.32 1625.34 1950.42 1983.63 2047,28 2226.36 4024.90 17009.44

.86 .98 1.08 .74 .75 .84 1.09 1.25 1.11 .33 _87

3.43 11.82 6.11 4,60 6.53 3,85 7.72 4.69 4.15 5.63 5_61

.41 1.27 .36 _01 .47 -1.56 1.02 .07 .13 1.27 .39

.53 .69 .74 .72 .75 .74 ,65 .61 .59 .76 .68

197501984

(cont'd.)

ENTERPRISES

SOCIAL SECURITY

Savings

SAVINGS,

pesos)

NON-FINANCIAL

I-S Gao

Investment

-135_35 2299_69 772.5 10382.55 -579.87 "7694.56 -1252.66 7387,44 -594.88 10109.07 -6082.51 12241.46 111.4.3 18062.12 -1821.54 14536.95 -1752.35 12149.12 2651,86 18421.35 -7680.5 113284.31

Savings 242.77 226.28 344.78 -179,60 -267.74 _212.66 932.55 1717.99 1529.15 3815.98 8151.5

FINANCIAL

I-S Gao

Investment

2056,92 10156.27 7349.78 7567.04 10376.81 12454.12 17129.57 12816.96 10619.97 14605.37 105132.81

2140.13 5098.13 2776.59 2039.02 4739.44 4283,04 5607.26 5163.86 7293,49 6258.60 45399.56

Savings 131.96 157.99 180.20 216.68 283.67 479.57 398.14 435.62 444.50 -6120.43 -3398.10

I-S Gao 2008.17 4940.14 2596.39 1822.34 4453,77 3803.47 5209.12 4728.24 6848.99 12379.03 48789.66

Ratio to GNP (%1 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1975-1984 (Ave,)

-.12 _58 -.38 -,71 -.27 -2.30 .37 -.54 -.46 .50 -.29

2.01 7.74 5.02 4_17 4_64 4.63 5.95 4.33 3.21 3.50 4_35

.21 .17 .22 -.10 -_'12 --.08 _31 .51 .40 .73 .31

1.80 7.57 4.80 4.27 4.76 4.71 5.64 3.82 2.80 2.78 4_03

1.87 3.00 1.81 1,15 2.17 1.62 1.85 1.54 1.93 1,19 1.74

.12 .1.2 ,12 .12 .13 .18 ,13 .13 .12 -1.16 -. 13

1.75 3.68 1.61_ I. 01 2,04 1,44 •1.72 I..41 1.81 2.35 1_87

I

TABLE

2: FINANCING

OF

PUBLIC

(In million

Item Deficit/(Surplus) Foreign Borrowing Domestic Borrowing Net Domestic Bank Credits Monetary Authorities Domestic Money Banks Net Domestic Non-Bank Credits

1975

1976

SECTOR

DEFICIT,

1975-1984

pesos)

1977

1978

1979

1980

1981

1982

7075.11 6302,29

26700.62 7563.75

20085.45 13731.41

15865.64 1673.48

23539.2 15124.84

3672 3323 349

7701 3343 4358

5136 3375 1760

346 -5086 5432

23557 9357 14199

8068.36

35983_17

64.25

57.05

16.99

4001.93 1243.05

16099.46 1805.79

9265.92 6732.97

6795.44 7068_73

9189.53 7831,82

3984 2250 1734

1I18 1205 -87

1137 523 614

67 57 10

-1416 -837 -579

13175.67

1395.95

-340_29

2773,71

11.22

72.66

104.02

85.22

89.88

28.32

68.36

-1225.12

1812 1204 688

-1039.18

15464.87

-1346.96

1983

-943,84

1984

1975-1984 138618_ 79078,1"

Ratio to DefteR/Surplus Foreign Borrowing

31,.06

73.58

Domestic Borrowing Net Domestic Bank Credits

99.55

6.94

12.27

,98

- 15_41

25.61

13.75

38.34

32.36

1.47

Monetary Authorities Domestic Money Banks

56.22 43.32

7_48 -.54

5.64 6.63

.84 .14

-%11 -6_3

17,02 8.59

12.44 1.31

16.64 2.7

21_27 11.09

-21,61 23_08 '

81.8

15,06

57,92

-6.71

-5.95

Net Domestic Non-Bank Credits

Source: Central Bank

-30.61

-5.01

30.1.8

-14.69

34.28

6.75 . 10.24

25.96

"

I


A summary

of a research

that tariffs are no longer the main ecently, trends haveof shown instrumentworld of protection developed countries in the area of trade policy (please see Table l). Instead, non-tariff measures (NTMs) have been increasingly utilized as the primary instrument of protection. Non-tariff measures are the public and government regulations which intraduce unequal treatment between

study

domestic and foreign goods of the same similar production. The use of NTMs tve presented difficulties in tackling the problem of protectionism. First, there exists a large variety of NTMs which an importing country could impose for varying reasons. Second, application of NTMs can be discriminatory and discretionary. As a result, there is often a lack of transparency with regards to tile real nature and restrictiveness of NTMs. A larger study utilizes a firm-level survey to determine the possible impact effects of non-tariff measures. This paper presents an inventory of NTMs affecting most of Philippine exports imposed by the country's three (3) major trading A_artners, viz., U.S., Japan and the Europan Comnmnity. All of the top Philippine exports are subject to some form of NTMs in the U.S., Japan and the EC countries. These 3 countries employ, in varying degrees, at least 19 types of better-known NTMs (See Table 2). In the U.S., the most widely-used type of NTM is Health and Sanitary Regulations which affect 26 percent of all Philippine exports to that country. This regulation appliesto 15 major product exports such as coconut products, tuna, pineapple products, banana and fresh mangoes. One of the most commonly-used type of NTM in Japan is the Phytosanitary Regulation, covering 18 percent of total Philippine exports to that country. This is applicable to 12 export products, mainly in agriculture, such as bananas, coconuts, mangoes, copra and others,

conducted

by the Philippine

A GENERAL FOREIGN TO

Institute

for Development

Studies

ASSESSMENT TRADE BARRIERS

PHILIPPINE

OF

EXPORTS The European countries have the biggest number and most varied type of NTMs among the three countries. Moreover, there are many overlapping forms of NTMs by product and a single commadity would usually have to deal with

Working Paper Series No. 88-01 (48 pages) Erlinda M. Medalla Research Fellow, PIDS

more than one type of NTM. The most commonly-used NTM in the EC countries PERCENTAGE OF PHILIPPINE EXPORTS COVERED BY NTMs TO THE MAJOR TRADING PARTNERS

q)

% 1001

I-7 .a _•

90

The

80

75 %

o>

70

_

60

bl @ .r-

50

_

40

n.

30

gx

_. O _ _ .C ÂŽ U

Philippines'Three Major Trading Partners

47%

48

%

20 IO

@

(1.

0

i,

, EUROPEAN COUNTRIES

, JAPAN

UNITED STATES

The graph showsthat the European Countries impose th most number varied types of NTMs

and


IIll

II TABLE

Ill

Illl

1

TABLE 2

Weighted Tariff Average by Commodity

Group and by Country

CCCN* Group Number

U.S.

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Description

Japan

PERCENT SHARE OF EXPORTS AFFECTED

EC

Mineral Products 1.3829 ChemicalProducts 4.1710 Plastic, Rubber Products 3.5863 Hides and Skins 7.6292 Wood, Wood Articles 1.6680 Paper, Paper Products 1.2716 Textile, Textile Products 12.1799 Footwear 18.8595 Stone, Cement Products 8.0297 Pearls, Precious Stones 2.7093 Ba_ MetalProducts 3.9862 Machinery& Equipment 3.9922 Vehicles, Aircraft 7.7392 ProfessionalInstruments 4.8637 Arms, Ammunitions 5.4851 Misc. Manufactures 5.5750 Works of Art 0.6661

2.1682 0.6000 4.9852 5.5882 3.3631 5.8498 6.5905 2.8929 0.8148 2.5165 2.3762 3.3663 5.4218 8.6425 14.7644 12.7570 3_7818 6.4896 2.0792 1_5779 4.4233 3_4233 4_4998 4.86C4 3_21.80 7.6831 5.0441 5_7927 10_9290 5.3372 5.5205 6.1383 0.0000 0.0000

Source: GATT (1977)

are the quantitative

restrictions

1. 2. 3. 4, 5. 6. 7. 8. 9. I0. 11. 12, 13, 14. 15. 16. 17.

in the foma of ianport

licensing

which covers 35 percent of total Philippine exports and is applied to 56 commodities, Estimates of the over-all index of NTM coverage show that 48 percent of Philippine exports to the U.S. are covered by some form of NTM, 47 percent in the case of Japan, and 75 percent in the case of EC countries (See the figure). Although comparisorl among them using the index should be done with some reservation, the indices prove that the EC countries impose the most prevalent NTMs. []

o 1983

!3Us!!_: :i,1111::_

III

_

IIIIIII

Health & Sanitary Regulations Consular&CustomsFormalities& Doc. Rules of Origin Global Quota Price Support Production Control Countervailing Duty TariffQuota Quota Allocated by Country Import Levy Domestic Subsidy Minimum Import Price Import Restrictions Phytosanitary Regulations Import Documentation BilateralQuota Voluntary Export Restraint

18. Packaging Requirements 19. Discriminatory Sourcing 20. Restrictive Practices tolerated 21. 22, 23. 24. 25, 26. 27. 28. 29. 30. 31. 32. 33. 34, 35. 36. 37. 38, 39. 40. 41, 42. 43. 44. 45. 46. 47. 48, 49. 50. 51, 52.

BY TYPE OF NTM

%Share of Exports Affected U.S. Japan EC

Type of NTM

*Custom's Cooperation Council Nomenclature [formerly Brussels Tariff Nomenclature (BTN)]

!

IllI I

by Governments Import Monitoring Import Rcstrictions

26 9 4 6 0 0 i 7 7 6 6 6 0.28 0.99 2 7 1 0.12 1

0.02 4 4 4

4

7 8 34

18

0.48 15

14

1 1 0.28

Surveillance 1 Other Price Distorting Measures 0.56 Import Licensing (Method unspecified) 1 Health Certification Import Authorization Customs Classification Seasonal Tariffs Commodity Tax lnternal Tax Deficiency Payment Health & Safety Standards Sugar Excise Tax Discretionary Licensing State Trading Marking & Packing Requirements Quota Technical Regulations Supplementary Reference ImPort Price Licensing Technical Requirements Price Co_atrol Selective Internal Tax Restriction (Unspecified) Entry Control Measure Certification Requirement Flexible Import Fee System Variable Levy AdditionalDuty on Sugar Automatic Licensing

54. Export Restraint 55. Testing& Certification Requirements 56. Licensing for Surveillance 57. Tripartite Accord 53. Marketing Standard Regulation

IHIIII

11

0.48 0.48 7

1

24 18

4 4 14 14 0.38 4 0.05 2 4 14 0.33 14

0,33

0_48 13 1 22

0.12 0.94 35 1 0.19 18 35 31 11 0.90 15 3 1 0.23 9 3

III


DEVELOPMENT

RESEARCH NEWS

MARCH.-APRIL

FORTItCOMING TOPIC/SPEAKER/s

SPONSOR/s/TYPE

1988

SEMINARS

OF SEMINARS

DATE / VENUE

PRIVATE SECTOR DEVELOPMENT

United Nations Development Programme (UNDP).and PIDS/In-Country SeminarWorkshop Series

June 3-4; Hyatt Terraces, Baguio City (Metro Manila Conference July 7-8; Montebello Hotel, Cebu City (Vimyas Conference) July 14-15; Davao lnsulaz Hotel, Davao City (Mindanao Conference) August 12-13; Agoo Playa, La Union (Luzon Conferent_)

FINANCING DECISIONS, RATIONAL EXPECTATIONS AND THE '_ROWDING-OUT" EFFECT: THE CASE OF THE PHILIPPINES by Dr. Ma. Soeorro H. Gochoco

PIDS In-Hou_ Staff Seminar

June 28; Room 211, NEDA sa Makati Building

AGRICULTURAL AND RURAL DEVELOPMENT IN THE PHILIPPINES

PIDS Mini-Workshop Series (First Part)

July 4; Room 211, NEDA sa Makati Building

PROTECTION AND COMPARATIVE ADVANTAGE IN COMMERCIAL FISHERIES by Ms. Fe G. Seligman

PIDS In-House Staff Seminar

August 1; Room 211, NEDA za Makati Building

IMPORT LIBERALIZATION by Mr, Wilhelm Ortaliz

PIDS Resource Speakers' Forum Series - Fkst Part

September 9; Operations Room, NEDA sa Makati Building

ASEAN COOPERATION by Mr. Wilhelm Ortaltz

PIDS Resource Speakers' Forum Series Second Part

September 14; Operations Room, NEDA sa Makati Building

FINANCIAL INTERMEDIATION IN THE RURAL SECTOR: RESEARCH RESULTS AND POLICY ISSUES

Agricultural Credit and Policy Council (ACPC) - Ohio State University (OSU) PIDS Joint Seminar

September 26-27; C'uaderuo Hall, Central Bank of Philippines

PUBLIC HEALTH AND ENVIRONMENTAL SANITATION POLICIES by Dr. Metodio Palaypay

PIE)S Resource Speakers' Forum Series Third Part

October 11 ;NEDA sa Makati Building

PIDS and the U,S.T. Graduate School

October 14; U.S,T. Graduate School

by Dr. Ciulito Habito, Dr. Agnes Quisombing, Dr. Ma. Cynthia Bantilan and Dr, Cayetano Paderanga

SEMINAR ON POLICY ISSUES IN PHILIPPINE FISHERY RESOURCE-BASED DEVELOPMENT

!

.

"national

(From

page

Systems

Symposium...

P.O.

2)

terns;

k.)

o.)

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n.)Hydrogen Fuel

Ceils;

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in

r.)

Authors

the title 200-300 31,

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p.)

Ocean

q.) Energy Energy

s.) Ethanol as Fuel. Papers on any of come.

30

are

Education;

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areas

requested

Sys-

1988 to: The Symposium

to

proper

Philippines

fee

and P750.00

and

which

must

are we]submit

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for

by

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partici-

participants, the Secretariat

will

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and

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may

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Telex

No.:

foreign

of

applicawill

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be

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are availabl.e

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for

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tions/registration or before

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held

Hotel's Pandanggo ballroom. This will cover all aspects of energy

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on

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Office of Energy Nonconventional

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III II I

paper 15

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send their registration or telegraphic transfer

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be received

text by

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,for

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be notified

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pants

(ITDI)/NIST II

the

and

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c/o Ms. Pilar G. Anglo Industrial Technology

II II IIII

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1988.

reach 1988.

Registration

Thermal Policy

September

shotfld cember

of their papers and an abstract of words not later than September

Institute

774,

Telex: ITT 40404 If accepted, author will

Transportation; 1.) Waste Heat Recovery and Cogeneration; m.) Building Energy Management;

Box

at:

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818-8614(DL) 85-10-21 to 31 (loc. 245,290 & 291) 22259 PNO PH 63667

PNOC I

PN 9


DEVELOPMENT RESEARCH NEWS

IFORTHCOMING

I IL"

ANNOUNCEMENT and fifth floors of the NEDA sa Makati Building will soon transfer to the third floor. ThePIDS transfer allow for more Some staff will occupying the afourth

MARCH - APRIL 1.¢,t88

ongoing T.E and FIFTH pipeline LISTING researct_ of completed_ studies on economic .development and policymaking in the Philippines will appear in the May-Jul,1988 issue of the Development Research News (DRN) under tile undertaken by various institutions that include private Project. and government agencies Clearinghouse These studies are as well as local and international research

ment. included, 11 of which are on Agriculture The staff be affected by and Food and 8 are on 34 Development spacious and which efficientwillworking environ-institutions. In thisbatch, studies are the transfer are the Office of the VicePlanning Methods and Approaches. This President, the Research Staff, and the listing will be of interest to scholars doing Research Information Staff including the research on these areas. Library. THE MAY-JUNE 1988 DRN issue will feature an article on the recent ASEAN interested parties who wish to get in Sunrmit proposals for economic coopera, touch with PIDS nray call telephone lion_ This article is written by Dr. Floriau numbers 85-67-98 (Vice-President); A. Alburo, Deputy Director-General of 816-10-91 (Operations and Finance the National Economic and Development Staff); 865-705 and 884-059 (Research Aut1mflty(NEDA). Information Staff); 855-817 (Research THE JULY-AUGUST 1988 issue of Staff); and 857-902 loc. 211, 229, 242 the DRN will feature the second batch of and 250. i the Research Folio Serie_.',,Tb.e research summaries will consist of th)_6--studies focused on pawnshops, cooperative credit

I

II

ASEAN. (CCUs) unions In addition, and this Japanese issue will aidconto tain the usual update on new publications and recent seminars sponsored by the institute, ll

I

II

tL"'_S_

_I

i

t

_

Workshop,.. (From page .l) namely: "Production Statistics"; "Income and Employment Statistics"; ;_,,_ "Prices and Other Statistics".Tbe ses! were moderated by Dr_ V_ Bruce J. Tolentino, Executive Director, Agricul.rural Credit and Policy Council; Dr. Mahar .K. Mangahas, President Social Weather Stations: _md Dr. Ponciano S_ Intal, Jr., Professor at the UPLB College of Development Economics and Management. mm

I

I

DEVELOPMENT RESEARCH NEWS is a bi-monthly publication of the PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES (PIDS). It highlights findings and recommendations culled from PlDS-sponsored research or related studies done by other institutions. PIDS seminars, publications, and ongoing and forthcoming projects which are of interest to policy-makers, plamlers, administrators, and researchers are also announced. PIDS is a nonstock and nonprofit government research institution engaged in long-term policy-oriented research. This publication is part of the lnstitute's program to disseminate information in order to promote the utilization of research findings. The views and opinions published here are those of the authors and do not necessarily reflect those of the Institute. Inquiries regarding any of the studies contained in this publication, or any of the PIDS papers, as well as any suggesttions or comments on the publications are welcome. Please address all related correspondence or inquiries to: RESEARCH INFORMATION STAFF (RIS) PHILIPPINE INSTITUTE FOR DEVELOPMENT STUDIES (PIDS) ROOM 307, NEDA SA MAKATI BUILDING 106 AMORSOLO STREET', LEGASPI VILLAGE, MAKATI 1200, METRO MANILA Re-entered as second class mail at the Makati Central Post Office on April 27, 1987_ Private firms and individuals are charged at an annual rate of P60.00. Students, libraries, academic and research institutions are charged at an annual rote of _50.00. For foreign subscribers, the annual rate is $16.00. All rates are inclusive of mailing and h.andling costs.

10

IlUll[ ; ..........

q7........

'=*'_""_ial_llUfl_ltllltllRIrd__|lli/b

=:-

TM ............

_,_r..............

_

Summaries of Several PIDS Research Studies  

March-April 1988 ISSN 0115-9097 I II'1 ?."Tlill .....__I_IttN_IIlI#__ In this issue of the Development Research News (DRN), we are starting...

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