Reviewing our national budget

I have been doing some research lately as shown in my blog posts showing several refences viewable in it scribd format. I blog also for my reference, so that I could go back to them when necessary. I blog about various and numerous subject matters because I want too learn and learn some more.
I would kike to have a further understanding of our national budget.
I have posts about various programs namely The AFP Modernization,The Agricultural and Fisheries Modernization and some other topics.

The two programs has encountered financing problems. The AFP modernization program's budgetary allocation is a mere 5 Billion pesos annually. The AFMA has always had financing problems like the AFP modernization.

I always keep om wondering why legislate programs and having them signed into law then later on we won't allocate money for them?

I know the bulk of our budget goes to debt servicing which is always appropriated automatically. Add principal payment and do you have left.

Now that is me talking.Let us take a look at the paper prepared by The Senate Economic Planning Office (which seems to be my favorite source as of late)

The 2009 Proposed Budget

AG 2008-01 - The 2009 Proposed Budget (revised)

Additional Notes:

I am not sure where the principal payments category is to be found on table four under Expenditure by Sector(of the SEPO Study), but from the dbm site:

for 2007 it was: P 303,834,000,000

For 2008 it was: P 328,341,000,000

I would safely assume that almost P 600 billion went to debt servicing during 2007 and 2008.

If that is the case,here is another major concern: personnel services

Table 5 of the SEPO paper shows that for the 2008 budget was P 384.8 billion.

If you addd the principal payments of P 328,341,000 and the interest payment of P 269,847,000,000
That would be a whopping P 982,988,800,000 out of the P 1.2267 Trillion budget

That leaves only P 243.7 Billion for other expenses,capital outlays forr 2008

And because of the Salary standardization as stated in the paper peronnel services wll be beefed up by P 45 billion for 2009 and same old story for 2010.

If we continue doing this;practically, we spend 1 Trillion Pesos for salaries and debt services, and just 140- 200 billion for capital outlay.

What do we do privatize government, others are even suggesting that we need more nationalization because of the failure of the privatized water utilities to deliver.

Computerization and automation has not reduced government personnel.Reengineering the Bureaucracy?
I heard that before,but will the group C.O.U.R.A.G.E even allow it? Maybe it's just a distribution problem, a sort of over supply and under supply.
We are said to have too many lawyers,but government lawyers are hard to find.We still lack police and coast guard personnel yet we have a 115,000 strong armed forces with not enough ships,airplanes,choppers,tanks,ammo and equipo.

Speaking of Reengineering the bureaucracy, here is another SEPO policy brief:

PI 2005-04 - Re Engineering the Bureaucracy - Issues and Problems

Do we postpone debt servicing,why shouldn't we? Practically every body has been doing it, it even goes back to more than 800 years.

This Time is Different: A Panoramic View of Eight Centuries of
Financial Crises

This Time is Different: A panoramic view of 8 centuries of financial crises


An article about the national debt from the Manila Times.

Is the Philippine Debt problem Over?


I just blogged about a study clamoring for sustained policy reforms so that the Philippines would no longer be the Asia's underachiever.How can we have sustained policy reforms if the programs cannot be implemented because of financing issues?

Shipbuilding

Maritime disasters keeps on happening in the Philippines.

There are several factors,namely:
Passenger overloading,inclement weather to over aged second hand imported vessels.

Let us focus on the use of second hand vessels.

RA 9295 or the domestic act promoted local ship building and putting a limit on the age of the recently used vessels.

I could summarize my concern withoutover simplifying.
First, the shipyards are dilapidated,then the cost to build ships are for lack of a better term very costly due to high interest rates,and the rest of the overlying factors.
Sure, we were able to invite Hanjin and showed that Filipinos can build ships,so what is the problem?
Aboitiz has built and exported ships for years,but yet they choose to import vessels.
ATSC and MCC Transport import 2 more vessels

I will copy paste a few articles from Timawa.net forum

FBMA Aboitiz shipyard builds cheaper ships than Tenix australia

February 20, 2003
sunStar News
By Elias L. Espinoza

The leaders of this government must be shortsighted that it just ignored the capability of FBMA Babcock Marine in Balamban, Cebu to build ships for the Philippine Navy and the Coast Guard.

The shipbuilding capabilities of FBMA Babcock Marine in Balamban that provided employment and enormous income in this western seaboard town of Cebu are already internationally acclaimed.

It is simply mystifying that while the British government had their training ships built in Balamban at FBMA Babcock Marine, our own government prefers a shipbuilder in Australia to build the training vessels for the Armed Forces at a higher price.

The composition of FBMA Babcock Marine ownership may not be fully Filipino but I am sure that the hands that worked on all the vessels that were built in Balamban are all Filipinos. This administration should have taken pride of this fact.

This is the irony of our brand of leadership or politics. While the leaders of this government imposed upon us patriotism, it failed to lead the role that is worthy of the people’s emulation.

The government’s decision to have its vessels for the AFP built in Australia even at a higher cost only gives to suspicion that it is not about the capability of the shipbuilder but so much on under the table transaction. You know, the higher the price the bigger is the commission.

The shipbuilding capabilities of FBMA Babcock Marine, I suppose, is not the issue. Neither it is the price or the cost of building a vessel for the AFP since they can offer a lesser price. It is something that they can’t come to terms with.

I don’t suppose that the top brash of the AFP were only after the mark on the vessel that it is made in Australia. It’s too simple to be believed. Don’t blame our leaders for the slump in our economy.

February 18, 2003
3 British ships almost done
By Linette C. Ramos

THREE 27-meter aircrew training vessels, which some 80 Cebuanos helped build, will sail to the United Kingdom next month for the British Ministry of Defense to use in their military exercises.

One of the vessels was tested off the waters of Balamban yesterday, as workers of FBMA Babcock Marine Inc. worked on the finishing touches of the two other vessels at the shipyard in Barangay Arpili, Balamban, Cebu.

FBMA entered into a contract with Smit International to build three of the six vessels the British Ministry of Defense will operate, FBMA project manager Peter Stillwell said.

Smit is a British company providing vessels and other training equipment and manpower to the British defense ministry.

While FBMA has been building the training vessels for Great Britain’s armed forces in the past months, it has also tried to enter into a contract with the Philippine Coast Guard and the Philippine Navy.

Ironically, though, the Philippine Government prefers to have the Armed Forces of the Philippines’ training vessels built in Australia, often at a higher cost, Stillwell said.

“It’s a strange thing. We have been working hard to promote to them vessels made by Filipinos that is of world-class standard but we couldn’t get them to have us build theirs,” he told Sun.Star shortly after the sail test yesterday.

Carpets on the cabins, floor tiles, upholstery on the furniture and a visible “Made in the Philippines” print on each vessel are among the last touches FBMA will work on before it is shipped on March 10.

Aside from Great Britain’s armed forces, FBMA also manufactures shipping and passenger vessels for South Korea, Hong Kong and Macau and Supercat Ferries in Cebu and Mt. Samat Shipping in Bataan.

Balamban Mayor Alex Binghay said the shipbuilding industry in the town is a source of revenue for the municipality and provides jobs to thousands of locals there.

He lamented, though, that there is still a seeming lack of support from the government, which does not patronize the vessels Filipinos make.

“The industry really helps the people economically and is good for the community here. Our President should look into the transparency of the armed forces and see why it does not buy vessels here,” Binghay said.

Stillwell and Binghay gave Sun.Star a tour of the facilities and equipment of Smit Yare, one of the three vessels named after rivers in the UK.

The two other vessels, weighing 55 tons each and running 22 knots, are Smit Towy and Smit Spey, which will be launched tonight.

The vessels are equipped with a rigid inflatable boat (RIB) that can be launched from the rear portion of the vessel and is used to recover life rafts during military exercises.

It also has a towing device that can retrieve the RIB and recover torpedoes during marine activities of the defense ministry.

Two major engines run the propellers of the vessel while another small engine runs the small water jet. It is also equipped with the latest radio, radar and communication equipment and engine control panels.

Each vessel has four comfort rooms, four shower rooms, four furnished cabins, a kitchen, pantry, laundry room, locker room and a sitting room.

Since it operated in 1997, FBMA has built 10 vessels and refurbished 22 others.

The first vessel it built was a 45-meter passenger ship that could run 52 knots and was the fastest running vessel in the world in 1997. It now plies the Hong Kong-Macau route.

Before the Smit series, FBMA built a 52-meter vessel that now operates in Korea. It is only vessel in Asia that meets international standards.

(February 18, 2003 issue)

DAILY SHIPPING NEWSLETTER 2003 –

64 meter fast ferry order from FBMA Babcock

MarineRederij Doeksen has announced at the IMTA-Interferry conference in Rotterdam that it has selected FBMA Babcock Marine from an international group of specialist shipbuilders for the construction of a 64metre vehicle and passenger catamaran. Rederij Doeksen is a leading Dutch ferry operator, having been in business since 1923, and currently operating five ferries, including Ro-Ro vessels and high speed craft.The new 64metre vessel will have a service speed of 15 knots and operate on the Harlingen to Vlieland route across the Waddenzee in The Netherlands. The catamaran will be the largest vessel so far constructed t the FBMA Babcock Marine shipyard in Cebu, Philippines, with delivery in November 2004.The catamaran will have a steel hull and aluminium superstructure and incorporate a drive-through vehicle deck with bow and stern access for roll-on roll-off vehicular handling and rapid turnaround in port.Spacious passenger accommodation on three decks include over 900 internal seats, with overall capacity of up to 1300 passengers, and incorporates a feature passenger VIP lounge, tourist class saloons with a mixture of aircraft style seating and table and chair arrangements, separate bar area available for renting out to groups, and a large open sun deck. A large servery will provide passengers with a range of refreshment choices on the crossing, and there is also a separate play area for children.The vehicle deck will accommodate up to 58 cars along with motorbikes and cycles, or a mix of cars, baggage carts and trucks of up to 12.0 tonne axle load down the central vehicle lane. Stern and bow doors will allow rapid drive through loading/unloading capability with the hydraulically operated bowvisor hinging down below the horizontal to facilitate landing on an adjustable shore bridge. A sloping bonnet over the vehicle deck with hinged opening covers will ensure that trucks can be loaded or unloaded at all potential angles of the shore bridge resulting from tidal or vessel draft and trim variations.Two bow thrusters are fitted to ensure high manoeuvrability whilst berthing and the four propellers are specially designed for operation in shallow and highly silted conditions. The forward half of the vessel and transom will be strengthened to enable safe navigation in potential ice conditions in the Waddenzee, with capability of up to 300mm nominal ice thickness, and up to 400mm of snow cover.Paul Melles, managing director of Rederij Doeksen said "We had the vessel designed to our requirements by Sea Transport Solutions of Queensland, Australia, and which then allowed us the flexibility to select the best builder. After visiting a number of yards and viewing their work we are very pleased to place this order with FBMA Babcock Marine. The yard has exhibited an excellent quality of workmanship and, coupled with a competitive price, we expect to gain a first class vessel to add to our fleet."John Warbey, managing director of FBM Babcock Marine, said "This contract is another important milestone in the development of the FBMA Babcock Marine shipyard in Cebu, Philippines. Coming so soon after the order for a 47metre Ro-Pax and the completion of three 27 metre aluminium patrol craft for the UK, it demonstrates the excellent capability of the yard."

It is always more than meets the eye.

Yes we can build cheaper boats but is it really cheaper,when you talk about financing costs, cost of materials like procuring steel,labor costs,etc.?

If we finance this ourselves,the government will have to pay it in installments and the shipowners will have to wait. Would that be acceptable to the shipbuilder? If you cut costs then the first target would be to cut the labors cost, then who would build for you.

If we can export ships, why can't we build for us?
Of course we can export ships, because we can recover the costs because the buyer can afford it. At least that was before the global financial crisis.

Here is a link to a BOI report on Philippine Shipbuilding for export.

Shipbuilding

There will be a port to be built in Saranggani,but why do I have this feeling that it is not for domestic purposes.
Refer to this link: Shipbuilding set in Saranggani.


Let us goback to my first concern: Maritime Disasters.(Maritime Safety)
In this paper I will embed; The first paragraph mantioned something about continued existence of sub standard shipping.

The current difficulties being experienced with respect to the perceived continued existence of
“substandard shipping” is understandable, given the circumstances surrounding present day realities. It
is not possible to expect more subsidies from governments in the future; at the same time costs
continue to increase, primarily due to the ever-increasing cost of fuel as experienced in the past two
years.

In addition, please take note of the following remarks from the president of the Maritime League :

However, it is not true that there is ample shipbuilding capacity as well as cheap financing available to
purchase ships throughout the world, at subsidized rates. In fact in the Philippine environment, the latter
is the primary problem, thus resulting in the recourse to purchase second hand ships for the domestic
fleet.

Comments on the Information Paper, International Shipping From the Philippine Maritime League

The Philippines; Asia's under achiever?

Why are we perceived to be Asia's Under achiever's?

I will have to cite studies first is a study that really hits the nail by the head a study entitled: ASIA’S UNDERACHIEVER: DEEP CONSTRAINTS IN
PHILIPPINE ECONOMIC GROWTH.


Its abstract:

Numerous studies have tried to explain the poor growth performance of the Philippines.
This paper critically reviews related literature on constraints to long-run growth, as it applies to the
Philippines. We evaluate several factors, namely: culture; corruption; and institutions. The last
offers the most convincing explanation for mediocre growth. Hence, to raise the country’s growth
trajectory, I recommend: sustained policy reform; less hand-wringing over Filipino culture and
corruption; and above all, focused and sustained development of functional capitalistic institutions.

Asia's Underachiever: Deep Constraints in Philippine Economic Growth

The Paper mentioned benign0's book:

Get Real Philippines Book

SUSTAINED POLICY REFORMS:

Let us not be mistaken that benign0 is not for sustainable reforms.He
benign0 and the the so called anti-pinoy, also has yheir views for sustainable policy reforms by asking very candidate of any elective posts to lay down their respectivedown their platforms first, before running for any elective post and deviate from the behavior of electing officials based on their winnability. If we continue on voting based on winnability, then what sustained policy reforms are we talking about?

Here are some issues that I think we should tackle for policy reforms:
Regulating Competition,Making Growth Work For The Poor,Reproductive Health, Nuclear Energy, and The Perks and Perils of a Strong Peso .

Regulating Competion

PB 2009-04 - Regulating Competition

Making Growth Work For the Poor

Making Growth Work for the Poor

Five Pillars of Growth

Five Pillars of Growth

Reproductive Health

PB 2009-03 - Promoting Reproductive Health

Are We ready For Nuclear Energy/

PB-2009-04-2 - Powering the Future

The Perks and Perils of a Strong Peso

ER 2008-01 - The Perks and Perils of a Strong Peso - amended

If we talk about policy reforms, how can we miss the Charter ChangeDebate?

PI 2006-02 - The Missing Links in the Charter Change Debate


CORRUPTION:


Benign0 also says that trust is the key to combatting corruption.

We seem to have a problem with our procurement system.
I present to you a paper on plugging the holes of the philippine procurement system.

PB 2008-05 - Plugging the Loopholes of the Philippine Procurement System
Here is another piece of legislation that concerns the Freedom of Information,this bill seeks to promote transparency in every transaction on matters of public concern. Below is the Senate Committee report:

Senate Committee Report 534 (Freedom of Information Act)


While we are at corruption; why won't we take a look at the Korean situation:

Bad Loans to Good Friends: Money Politics and the Developmental State in South Korea

CULTURE:
Benign0 is now focusing on three beahavioral/cultural dysfunctions,namely:
Bahala na(Come what may),Pwede na(This would do) and Impunity which is called....

The Filipino Cultural Trinity.
The author used the recent typhoon(Ondoy) to demonstrate his thesis.

For me personally, it is not just a matter of sustained Policy reforms;because we may have the best of intentions and still have no results.The mentioning of our culture should not be downplayed because we cannot deny that certain culural traits do hamper our growth.
Having said that, I say we must have the sense of urgency to change.

Lastly, Here is a piece by BongV where he asks : Is the Philippines ready for change?