The risks of complacency by BENJAMIN E DIOKNO on Jul 22, 2012 11:41 PMNo Comments Core Business World, 17 July

y 2012

In the face of a better-than-expected 6.4% gross domestic product (GDP) growth in the first quarter of 2012, Malacaang and the Bangko Sentral ng Pilipinas (BSP) run the risk of being too complacent. It aint broke, so why fix it? says President Aquino in response to calls for amendments of some economic provisions in the Philippine constitution. He asks: the economy has grown at 6.4% in one quarter and the governments credit ratings have been upgraded to one notch below investment grade, so why rock the boat? But thats precisely the problem. There is yet no convincing body of evidence that the present administration has fixed outstanding constraints that bug the Philippine economy. The 6.4% GDP growth in the first quarter of 2012 may not be sustainable. It came after a weak economic performance in 2011. And the Philippines has been rated below investment grade before. The reality is that not much has been done to date. And as an old song goes: nothing comes from nothing. The perception of corruption lingers. Bureaucratic red tape continues. The regime of rule of law remains spotty. Public infrastructure continues to crumble, with the governments flagship PPP program yet to take off. Its tax effort taxes as percent of GDP remains dismal. And the Philippines continues to attract only a fraction of foreign direct investments (FDIs) of what our ASEAN-5 neighboring countries attract. The Philippine economy is unwell and sputtering. I will be convinced that the Philippines is on its way to a strong, sustained and inclusive growth only after experiencing 12 quarters of strong and sustained growth, unemployment rates of 6% or less, poverty incidence in the neighborhood of 20%, and Filipino workers abroad trekking back home as decent jobs become available here. Monetary authorities policy response to calls for more aggressive policy actions to stem the appreciation of the peso is half-hearted. It is more symbolic than real. Last Friday, BSP cut interest rates on special deposits account (SDA), a facility used by the central bank to mop up excess liquidity in the financial system and help contain inflation. The rate cut was a mere 3.125 basis points across the board. The Bangko Sentral lowered the one-week deposit rate to 4.03125% from 4.0625, the two-week rate to 4.09375% from 4.1250, and the one-month rate to 4.15625% from 4.1875%. The cut in interest rates was ridiculously tiny; I doubt that it will achieve the desired result of reducing deposits in the SDA, which, to date, has P1.64 trillion ($39 billion) worth of placements.

Why? Because yields on alternative investment opportunities remain extremely low. Philippine treasury bill rates were quoted at 2.275% for one-month tenor in the secondary market. Rates on the most recently auctioned US Treasury Bills for each maturity tranche (4-week, 13-week, 26-week, and 52-week) are 0.08%, 0.10%, 0.15%, and 0.19%, respectively. The European Central Bank (ECB) recently cut its policy interest rate to 0.75% from 1.0%. The EURO London Interbank rates for 1-week, 4-week, 12-week and 52-week are 0.07929%, 0.14143%, 0.36964% and 1.01821%, respectively. Given the SDA rates are still above the yields of financial instruments abroad and at home, I doubt whether the new BSP move might make a difference. The week before that, BSP tightened rules on capital inflows by limiting where foreign funds can put their money. The success of this other move remains to be seen. The devil is in the details. What happens to those foreign funds that have already been comingled with funds from domestic sources? Is this the case of closing the barn doors after the horse has bolted? BSPs success in purging foreign funds from SDAs is not guaranteed. On the other hand, the new policy will surely add heavier paperwork to the already burdensome regulation of local banks and trust funds. The first, best solution is to sufficiently reduce the SDA rates in order to make it less attractive for foreign footloose capital and to discourage local banks from parking their money with central bank. STRONG PESO, WEAK ECONOMY Policymakers have to set their priorities right. Do they want the Philippines to be known as the country whose currency (the peso) has appreciated the most this year or do they want it to be known as the country that has created more decent jobs, reduced poverty, and improved the economic wellbeing of its people the most? The Philippines is the best performer this year among Asias 11-most traded currencies, according to Bloomberg. Should the rapid appreciation of the peso be a source of pride or a source of discontent? Talk to the families of our workers abroad, to the exporters and workers in the export sector, and to owners of business process outsourcing firms. And talk to Customs Commissioner Biazon whos struggling to meet his revenue target. Are they better off now than a year ago? A sensible and thoughtful leader should be open to any and all possible reforms.

The risk is that in the face of the 6.4% GDP growth in the first quarter, policymakers might believe, wrongly, that alls well, and reject any call for bold reforms in public policy and governance. That would be tragic. The Problem About Complacency

Complacency (Photo Credit Torbenrick.eu) I just dont get the way people complain about why their lives are very miserable. Or the way they protest against something because our country is very stagnant. Or even the way they wonder why they failed on something they have done. I dont know if these people are just unaware, or they are pretending not to know the very root of all these thoughts. Complacency. From our own homes, to school. From the school, to the outside world. And the outside world, to the government. No matter where you try to look at it, or in what perspective you view it, there will always be a bunch of people who were once complacent, who are complacent and probably will be forever complacent. As a student, I will be a hypocrite if I say that once in my life, Ive never been complacent. I can only count those times with my fingers, the times I have been. But at one point, I just had to ask myself, Is this all I could ever do? I wasnt at all satisfied with the way I was doing in school. I was passing all my subjects, but I knew it was just not my best. Then I realized that my mind was wrong and I just had to get over that complacency. The problem about complacency is that it eats up all of peoples potentials. It erases all couldve beens and just gives you with something that Oh, this is just okay. Just enough. It tramples on your determination, of dreaming to have a life, a future that is possibly better, if not, the best. See, the thing is, when asked, What do you think is the worst problem of the Filipinos? A few might answer, Our government officials are so corrupt! A few might even say, Theres just too much poverty. Some might add, No matter what they say, there is inequality between the rich and the poor. Oh, I could go on all day and retell to you what Ive heard in my 19 years of existence. But you know what? I figured out that we should just stop putting the blame on everyone and ask ourselves, What is my worst problem?

Complacency. Why do we have corrupt officials? Because most of the people dont exercise their right to vote, because they know others have already voted, so why waste their precious time lining up to vote? Because they are complacent that even though they would not vote, others will. And some, if not most, of these people have the mind-set, What can my vote do? Its just one ballot anyway. Well, my friend, think twice. 1,000,000 votes can never be a million if it didnt start with one. Complacency. Why is there poverty? Because most of our less fortunate countrymen do not dream. They think that since they have been born in poverty, that they do not have the right to dream anymore. But why would they let the society rob them off with a precious right? So precious that it could help them have a better future. Because they are complacent as long as they can eat once or twice, or if theyre blessed enough, three times a day. As long as they dont get wet, they are sick. As long as they can find a place to stay the night, they are okay. And what about those people who have promised more than a thousand times to help them? They are complacent that they have nothing to do with these people, as long as they are not harmed. Oh, will we still wait for them to harm us? Complacency. Why is there inequality between the rich and the poor? Because most of our poor fellowmen just wait for blessings. They are like Juan Tamad. Waiting for that precious guava to just fall from the tree. But life is never that way. You can not earn something, unless you have worked hard for it. If you did, then you must have done something wrong. Because the rich are complacent that as long as they are not bankrupt yet, the poor will stay where they are and do not pose any threat to their wealth. Because the poor just sit around and be complacent as long as they survive. People fail at life because of too much complacency. They fail in school because they were too complacent they still have the money to go to school whatever the grades they have in their class cards or certificate of grades. They fail in finding work because they are too complacent that there is still tomorrow. They fail in life because they were too complacent with themselves. They lose their drives in achieving what they could have possibly had with flying colors. Failure stems from stagnancy. And that stagnancy stems from complacency. I am not telling you that ALL Filipinos are like this. Ive been exposed for all I know, in news and current events. I have watched a lot of documentaries, read a lot of articles, flipped the pages of a few magazine and books. And it saddens me that for decades now, things have never changed. And so let me repeat with much emphasis. The problem about complacency is that it eats up all of peoples potentials. It erases all couldve beens and just gives you with something that Oh, this is just okay. Just enough. It tramples on your determination, of dreaming to have a life, a future that is possibly better, if not, the best. You have to have a dream. You have to have faith that someday, you will be that dream if God wills it for you. If not, then He has something better in store for you. Will you still remain complacent despite the knowledge that if you continue to fail, you are bound to fail in life? Its not yet too late. And battle is never over until the moment you give up and stop trying
http://definitelyfilipino.com/blog/2012/07/07/the-problem-about-complacency/