Imprison smugglers, economic saboteurs

EconomIc sabotage means destroying the country’s economy through illegal activities, like what the smugglers and hoarders of agricultural products have been doing. Economic sabotage is a serious crime because it cripples the economy and intensifies the problem of poverty.

Sugar smuggling, for example, not only deprives the government of revenues but it also adversely affects domestic sugar prices, to the detriment of our sugar producers. Hoarders of onion, on the other hand, create artificial scarcity in supply, which leads to price increases. The retail price of red onions in Metro Manila on New Year’s Eve made unpleasant headlines when it hit P700 per kilo. It was easily the inflation leader in 2022, and made Philippine onions the most expensive onion on Earth. At that time, onion prices in Singapore was around P85 per kilo; P55 in Vietnam; and P35 in China and in India.

Responding to the call of President Marcos for Congress to pass amendments to the Anti-Agricultural Smuggling Act, Quezon 4th District Rep. Keith Micah Tan last Tuesday filed a bill declaring “large-scale” agricultural smuggling, hoarding, cartelization, profiteering, and other acts of market abuse as economic sabotage. He said House Bill 8600 seeks to amend Republic Act 10845, or the Anti-Agricultural Smuggling Act of 2016. (Read, “House bill declares ‘large-scale’ crop smuggling as act of economic sabotage,” in the BusinessMirror , July 26, 2023).

“RA 10845 was signed into law with the primary objective of protecting Filipino farmers and their families from the rise in agricultural smuggling in the country. Since the law’s passage in 2016, however, even if there have been several reports of seizure of smuggled products, there have been no prosecution of individuals, groups, or corporations. It appears that some people have mastered how to circumvent the law in order not to be punished,” he said.

“The present condition of our farmers and the rising price of agricultural products because of their scarcity reflect the failure of national government agencies to fully implement the law,” Tan said, adding that “RA 10845’s potential to finally end illegal activities that sabotage the country’s economy and the livelihood of farmers had not been fully utilized over the years.”

Tan said the Economist’s 2021 Global Food Security Index (GFSI) reveals that the Philippines ranked 64th out of 113 countries in terms of four dimensions of food security: food availability, food accessibility, food utilization, and stability.

Based on the records of the Bureau of Customs, he said a total of P1.2 billion worth of smuggled agricultural products have been confiscated in 2022. “The government is losing millions of revenues as a result of smuggling, which is estimated at P250 million per year,” the lawmaker said.

Tan said it is high time to introduce amendments to the Anti-Agricultural Smuggling Act of 2016 in order to address and hopefully end not only smuggling, but also the issues of hoarding, profiteering, and cartelization of agricultural products.

The proposed legislation will consider as economic sabotage the hoarding, profiteering, and cartel of sugar, corn, pork, poultry, garlic, onion, carrots, fish, and cruciferous vegetables in the amount of P1 million, and rice in the amount of P10 million. To strengthen the enforcement and implementation of the law, an Inter-Agency Council on Economic Intelligence will be created under the proposed measure.

This will be co-chaired by the Department of Agriculture, the Department of Trade and Industry, and the Bureau of Customs, and will include the Department of Justice, National Bureau of Investigation, Department of the Interior and Local Government, the Philippine National Police, the Philippine Competition Commission, National Security Council, and the National Intelligence Coordinating Agency.

The bill said the penalty of life imprisonment and a fine of twice the fair value of smuggled agricultural products or products subject to hoarding, profiteering, or cartels, and the aggregate amount of the taxes, duties, and other charges avoided, shall be imposed on any person who commits any of the acts enumerated under the proposal.

Smugglers and economic saboteurs make the whole country suffer. It’s about time for the government to put its foot down. Let’s put all smugglers and hoarders of agricultural products behind bars for life. Let’s get rid of these deplorable leeches that have shown a callous disregard for the welfare of poor Filipinos.

‘Death of the debt’

John Mangun

Outside The Box

ThE headlines last week read: “Bolivia is now using china’s Yuan for trade, challenging global dominance of US Dollar”; and the “Dollar is dying!” Folks raised their glasses in a toast.”

Bolivia—no disrespect intended —is an afterthought on the global economic stage with an economy smaller than Uganda and Myanmar. Bolivia’s total external debt is a bit larger than 10 percent of the Philippines’ external debt. However, while the Philippines holds roughly $100 billion in foreign exchange reserves, Bolivia’s foreign reserves is $300 million, smaller than Moldova and Cameroon.

Bolivia’s foreign reserves cannot cover even one month of its imports, as its reserves equaled only 0.4 months of imports in May 2023. The Philippines Foreign Exchange Reserves equaled 7.9 months of imports in May. To meet its trade obligations, using the yuan may be its only alternative to stay in business.

In January 2019, 45 percent of all global trade was settled in US dollars. In April 2023, that percentage increased to 59.74 percent. The “de-dollarization” folks seem to be like relatives waiting for their rich uncle to die, and he just keeps living on and on.

Of greater concern than the “Death of the Dollar” should be the potential for the “Death of the Debt.” Understand that government or sovereign debt is never marked “Paid in Full.” Yesterday’s loan is ‘paid off’ by a new loan tomorrow. However, the total amount of a government’s debt keeps increasing. The only times in history that the US government debt actually decreased was in 1947, 1948, and 1951 under Truman and under Eisenhower in 1956 and 1957.

“The US Treasury Department increased its net borrowing estimate for the July-September quarter to $1 trillion. This amount was exceeded only during the Covid quarter of Q2 2020.”

Many of the K-Pop style economists use data that is meaningless, such as debt-to-GDP ratio, comparing a country’s public debt to its gross domestic product. A lender to a government does not care how much the total debt is as long as the country can pay the interest on time.

As of March 2023, the Japanese public debt is equal to 263 percent of its GDP, and the percentage of government spending for its debt service is 24 percent. In the US, debt servicing takes up 6.8 percent of the budget, and for the Philippines the percentage for interest payments is 11.6 percent.

Read the article under the headline “PHL debt stock hits fresh record high of P14.15T in June” and see if you can find one word about the cost of paying the debt service.

And here is the kicker for Japan. The Central Bank of Japan holds 52 percent of all Japanese government debt. The US Federal Reserve owns about 20 percent of US government national debt.

So, what’s the debt problem? It is not Sri Lanka, Pakistan, or Argentina as we are constantly told when discussing sovereign debt. Massive amounts of “First World” debt suck money out of the economy especially now that interest rates going up make lending to these govern-

Pinoy diaspora, winning formula

Lourdes

Jennifer

Vittorio

Lorenzo

Lyn

Street Talk

ThE “Filipinas”, our national women’s football team that competed at the FIFA Women’s Football World cup in new Zealand and made up of players with a mix of Filipino and foreign heritage, may have scored just one goal that won just one game but that was enough to wake up the yearnings of a country for national pride in a global arena, and not just in the world of sports. It also speaks quite a lot of what makes us Filipinos in this age and time.

It is said that wherever you go in the world, you are bound to run into a Filipino. Working in the harshest of conditions—in the oil fields of the Middle East, the Arctic fringes and in the remotest islands in the Pacific, Filipinos overcome hardship and loneliness with the common objective of bringing a better future for themselves and their families. We have the numbers all stacked up. The Philippines remains to be the leading global source of nurses, leading to a real scarcity of medical help locally as new nursing graduates are actively recruited overseas. Dubai Duty-free practically runs on Filipino hands and talent. And on most ships plying the oceans, it would be more ap- propriate to say—all “Filipino” hands on deck, as most merchant marines manning the global shipping industry are Filipinos. With close to an estimated fourth of our population working overseas, the money they bring in represents close to a third of our country’s annual GNP, which is significantly more than what is produced or manufactured locally. Wanting for a better life, given the scarcity of good jobs at home, has been the main driver for this Pinoy diaspora.

Filipinos working overseas are not just a recent phenomenon. “Manila men” or Filipino escapees from the galleon trade, founded what is perhaps the first Asian-American settlement, on the outskirts of what is now New Orleans in the United States. “Alaskeros” or what they call the Filipinos then working mostly in the fishing factories in Alaska made adobo beaver and lumpia salmon part of the Alaskan menu. Then you have the Ilokano dialect contributions to the Hawaiian street talk, which presumably began when Filipinos were recruited to work in the pineapple farms when we were still an American colony. As we move on towards a more challenging future, Filipinos will continue to move out of our motherland. The International Labor Organization estimates close to 2 million Filipinos who leave the country to work overseas.

A good number of our overseas brothers and sisters stay, settle in and grow a family in these foreign shores. Unlike other ethnicities, blending and assimilating in their adopted land comes easier. That is why, perhaps, despite their numbers, there had never been really a Filipino town, similar to a Chinatown or a Koreatown. And in such “blended” communities, the resulting generations of Filipino diaspora are born and melded in their own unique way.

There had been harsh and unnecessary criticisms coming from those left behind, against children of these “blended” generation who rise up to the occasion to represent ments financially attractive. Regardless of the political nonsense, these “First World” governments do not spend the borrowed money productively. They effectively use it to “buy votes.”

The Philippines and similar nations borrowed heavily during the pandemic, in effect to feed citizens who were suffering. The US and the rest borrowed to “stimulate the economy” and give the illusion that “Don’t worry, things will be fine soon. We have it under control.” the motherland. Questions on their right to do so, their intent, and qualification persist. But we tend to forget, no matter what their circumstances or reasons may be, the choice to represent our country was their choice; in the same manner that growing up in a foreign land was not.

The one trillion dollars that the US government will borrow in the next three months will come from the private sector, and that money will not be used to “build factories,” create jobs, or even build infrastructure, which is more government nonsense. It will be used to service the past government debt that also did not “build factories,” create jobs, or build infrastructure.

The “First World” Sovereign Debt Crisis is not about “The Debt.” It is about effective and productive private financial resource allocation, which the majority of the current debt does not provide. The death of this kind of debt will come eventually. And the fallout will be catastrophic. E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.

We, the ones left behind, need to be more forgiving and understanding. Knowing full well why the move to leave behind the comfort zone of our motherland, and their contributions to what we are right now; embracing and welcoming them should not be a problem. Look at other countries—China, Spain, Japan and others—they are giving preferential entry to foreign citizens with a hint of their heritage. With that move of recognition and gratitude, their own diaspora will guarantee them a steady flow of resources and talent connected and serving their motherlands.

Our overseas brothers and sisters may look and talk different from us, but in their hearts and minds are the same Filipino traits that we have. The Pinoy diaspora that saved us in the worst of times throughout our history will also be our winning formula, if we truly want to make it in the global arena.

The author may be reached at thomas_orbos@ sloan.mit.edu

By Samy Magdy | The Associated Press

CAIRO—Ahmed Salah grew anxious when he heard the news that Russia had suspended a crucial wartime grain deal. The bakery owner in Egypt’s capital is concerned it could mean global food prices soar.

“There mightn’t be immediate impact,” the 52-year-old said last week as he oversaw workers baking bread in his shop in Cairo, “but if they didn’t find a solution soonest, things would be very difficult.”

Russia pulled out of the deal brokered by the UN and Turkey to allow Ukraine’s grain to flow during a global food crisis. It helped stabilize food prices that soared last year after Russia invaded Ukraine—two countries that are major suppliers of wheat, barley, sunflower oil and other food to developing nations.

Egypt, the world’s largest wheat importer, and other lower-income Middle Eastern countries like Lebanon and Pakistan worry about what comes next. Struggling with economic woes that have driven more people into poverty, they fear rising food prices could create even more pain for households, businesses and government bottom lines.

Many have diversified their sources of wheat, the main ingredient for flatbread that is a staple of diets in many Mideast countries, and don’t expect shortages. Pakistan has even seen a bumper crop despite unprecedented flooding last year.

But the end of the grain deal is creating uncertainty about price hikes, a major driver of hunger.

It “is an unnecessary shock for the 345 million acutely food insecure people around the world,” said Abeer Etefa, a spokeswoman for the UN’s World Food Program.

Russia also has launched attacks on Ukrainian ports and agricultural infrastructure following the collapse of the accord, leading global wheat prices to zigzag. Despite the volatility, the costs are below what they were before Russia invaded Ukraine, and there is enough production to meet worldwide demand, said Joseph Glauber, senior research fellow at the International Food Policy Research Institute.

But for low-income countries like war-torn Yemen or Lebanon that are big wheat importers, finding suppliers that are farther away will add costs, he said. Plus, their currencies have weakened against the US dollar, which is used to buy grain on world markets.

“It’s one reason why you see food price inflation lingering in a lot of countries—because even though world prices I mentioned are at prewar levels, that’s in dollars. And if you put it in, say, the Egyptian pound, you’ll see that Egypt wheat prices are actually up,” said Glauber, former chief economist at the US Department of Agriculture.

“They’re certainly as high as they were during the high points of 2022,” he said.

That packs pressure on governments, which will have to pay more to keep subsidizing bread at the same level and avoid raising costs for households, he said. With many also seeing their foreign currency reserves dwindle, it could put countries in the Middle East and elsewhere in a more precarious financial situation.

Salah, the bakery owner, fears that if wheat prices spike, Egyptian President Abdel Fattah el-Sissi’s government could respond by hiking prices of bread.

“Such move would have heavy toll on ordinary people,” he said.

El-Sissi and other leaders raised concerns about higher food prices at a summit Russia hosted for African nations last week. He called for reviving the Black Sea deal through a “consensual solution” that takes into consideration “all parties’ demands and interests and put an end to the continued surge in grain prices.”

Homegrown grain doesn’t meet even half of Egypt’s demand, particularly wheat and corn. It buys over 10 million tons of wheat—mostly from Russia and Ukraine—and that is expected to grow.

Local wheat production is expected to remain at 9.8 million tons, while consumption increases by 2 percent to 20.5 million tons in 2023-2024, according to a USDA report from April.

However, the government said the impact of the end of the grain deal is minimal so far. Supply Minister Ali Moselhi said last week that Egypt has diversified its sources of imported wheat and that its stockpile would cover the country’s needs for five months.

Its wheat purchases from Ukraine have declined by 73.6 percent over the 2021-2022 period as Egypt tapped other sources, the USDA said.

Any increase in wheat prices would further strain Egypt’s economy, which has struggled from decades of mismanagement and outside shocks like the Covid-19 pandemic and war in Ukraine. That could force the government to cut nonsubsidy spending and push up inflation, Capital Economics said.

Food costs already are fueling a cost-of-living crisis. Annual inflation hit a record 36.8 percent in June, with food prices skyrocketing by 64.9 percent.

In Lebanon, the grain deal’s collapse could be an additional hurdle as the tiny Mediterranean country relies on Ukraine for at least 90 percent of its wheat, flour millers say.

The agreement helped resolve supply shortages that shocked the market during the onset of the war, causing large breadlines and rationing. Caretaker Economy Minister Amin Salam said any negative impact on wheat prices following the deal’s collapse will “certainly” affect prices at home.

The country of some 6 million is in the throes of an economic crisis that has impoverished threequarters of its population. Its main wheat storage silos were destroyed in the Beirut port blast in 2020, so its grain reserves lie entirely in private mills’ storage.

“We currently have two months’ worth of wheat reserves, and we have one month’s worth on the way,” said Wael Shabarek, owner of Shahba Mills. “While I expect some price increase, it won’t be the same as before—as the beginning of the war— when it was a total shock for us.”

However, Lebanon’s economy keeps shrinking, its currency has lost 90 percent of its value since 2019 and the World Food Program says local food prices are among the highest in the world.

Pakistan, meanwhile, is a bright spot. It was a major importer of Ukrainian wheat but this year had the highest domestic production in a decade despite disastrous flooding in 2022. The bumper crop is attributed to providing seed and other aid to farmers.

The government still calls for restoration of the grain deal to ensure global food security and avoid surging prices. Pakistan, whose ailing economy is getting a $3 billion International Monetary Fund bailout, was hit hard when food prices surged after Russia’s invasion. AP reporters Kareem Chehayeb in Beirut; Munir Ahmed in Islamabad, Pakistan; and Courtney Bonnell in London contributed.