J Vol. XlV No. 4
July -August 1996
I Io.876.r.am
Bell transmitted a complete sentence through the telephone to his assistant a short distance away in another room. That event portended the huge poten._dof telecommunications
The Philippine
in transmit-
speed information to any number atofinstaJntaneous people regard"ring less of location. with
ISSN 0115-9097 I
Industry*
Today; we find ourselves armed a technology that can send
through telephone networks not only spoken words but also written infermarion and computer data. This technology has radical implications for society. The miracle of telecommunications has significantly reduced naUonal borders and stimulated the pace
of human interacUon to such an extent that a whole new world is flourishing out there in cyberspace ....................... Sadly, however, the Philippine telecommunications industry has not kept abreast of developments in the in_ ternationa] field,
by Ruperto R Alonzo ,
andWilhertR.SanPedro"
Why Did We Lag irt 'reiecommunJcafion$? Telecommunications
*Thisis a revisedversionof Chapter5 of a countryreporton "Infrastructure andSustainability of
infrastructure
is a vital
need in modem society.
th in thePhilippines" submitted totheAsianDevelopment Bank(ADB)in preparation fortheAsian Yet, the Philippines is one of the deelopment Outlook:1996and1997. veloping countries with inadequate **Ruperto P.Alonzois a professor attheSchoolofEconomics, University ofthePhilippines. Wilbert SanPedrois a graduate studentatthesameinstitutionandwasformerlywithPIOS.
i
J " _
2
Food: Is.
6
AnInventory ofPhilippine
Crisis Looming?
Telecommunications Porlicipants
1] Historical Overview
It wa_ only three years ago when eellularphonesandpagerswereluxuryitems which only the rich people could have tucked into their belts. TOday,they have become a necessity in a world where cornmunication has taken centerstage. A multipage advertisement ofa paging cornpany, for instance, enumerated the oppormni_s thatm_htbelostbetweenparat and child (awareness of each other's activities) and employerand employee O'ob _o_o,on; without a pager The opening up of the telecommuni-
other's services in terms of wider area coverage, lowertollratesandfasterrespome to application. The land phone market which used to bedominated by the Philippine Long Distance Telephone Company (PLDT) has been invaded in recent months by the upstart Bayantel (orBayan Telecommunications Holdings Corp., a venture between the Lopezfamily and New York-based NynexCorporation). The consumers, of course, have benefited from thi_ kind of competition ahhough thefirms will nevertheless come out as winners in
_,a_*-ind_,.yin]093_tothemu, h- the_. rooming of a number of new telecommunicatiom firms which tried to outdo each
-_ P_, 16
: DEVELOPMENT RESEARCH NE-WS
I | I oncerns
E
July- Augur:: 1996 ' ',',.,'i . " '
for global food security have often been raised in recent years in the context of the debate on
further contends that world market prices of food willbe much higher, and the poor willbe priced out of the world market. Brown's alarmist projections
Nutrifion whichhighlighted a continuing large number of chronically undernourished population worldwide. Because of the international community's
environment, sustainabflity, and pop.ulafion growth as well as the impact of agricultural trade liberalization under the World Trade Organizafion (WTO). These concerns were successfully brought out to the general public
have gained some credibility with the recent fall in world cereal reserves and cereal prices. The Food and Agriculture Organization's (FAO) director-general has also recently warned that: "After a
apparent complacency toward future world food situation, the International Food Policy Research Institute (IFPRI) has conducted a series of research, conferences and seminars, and published materials trader the theme of "A 20/ 20 Vision for Food, Agriculture, and the Environment" since late 1993. The problem of ensuring an adequate future food issupply protecting objective to seek while solutions to the world natural resources for future gen-
FOO_
IS
a
Crisis Looming?
underwayerati°ns" Preparations the World are Foodcurrentl.for Sumn_t at FAO in Rome in late 1996 where world leaders are expected to renew their commitment to eradicate hunger and malnutrition, and achieve lasting food security for all through appropriate policies, strategies, and plan of action. Current concerns about the fu-
•byC.ristina C.David 2 ...................
through
Lester Brown's
alarmist
ar-
renewed
period
of bumper
surpluses,
tides initially published in the International Herald Tribune (1994) and subsequently referred to in other
we are now back to a situation where the world's grain reserves have fallen below the level considered necessary
widely circulated international publications, •According to Brown, China's cereal output will fall by at least 20 percent by 2030 as cultivated area declines and yields stagnate. To maintain the country's 1990 level of per capita consumption, 216 million tons of cereals
to guarantee global food security...and world prices have soared and the lowincome, food-deficit countries will have to pay out an additional $3 billion this year for their imports" (Agence France Press [AFP] 1996).
ture food-population balance from a number of factors:
and
stem
_:_ Declining per capita land water resources. The annual
growth rate of new arable land basil decreased progressively from 0.38 pe_ql. cent in the 1960s to 0.32 percent in the
in
1970s to 0.19 percent in the 1980s. In highly populated countries, the land frontier has effectively closed. With continuing urbanization, the culti-
of total world cereal trade. If per capita cereal consumption is assumed to increase up to Taiwan's present levels, China's cereal shortfall will reach 378 million tons. Brown also states that Africa will
raising the global food-population balance over the past three decades, concerted efforts have been made recently to draw public attention to future world food problems. In 1992 and 1993, the United Nations (UN), World
vated area is expected to decrease in absolute terms. Among developing countries, major expansion of cultivable land area would be limited to South America, where much of these lands are still under forest. Conversion
experience a cereal deficit of 250 million tons by 2030, a 10-fold increase from its present net imports. Given such huge projected increases in world demand for cereal imports which expc
Health Organization (WHO), and FAO sponsored a series of meetings related to the International Conference on
to agricultural land will thus entail environment costs. In Sub-Sahara Africa which is also characterized by a rela-
will to imported, import level level that have is about double thean current
Constraintsto FutureProduction In spite of the overall progress
_PaDer Dresented atthelOthAsia-Pacific Roundtable. KoalaLum_urJune5-8 1996
I
tively low man-land ratio, the high cost of market and water infrastructure would be a major constraint to opening new land for agricultural production. With a rapidly-growing demand for water among households and industrial users, the opportunity or scarcity cost of water for agriculture has likewise risen rapidly.Moreover, as ix-
achieved under experimental conditions with the rice and wheat green revolution technologies have levelled off (Pingaliet al. 1990). In fact, growth rate of yield per hectare has slowed down and even stagnated in many years. Although significant yield gaps remain between farm and experiment station yields, greater concern for both health and environmental costs of
early 1980s to not more than $8 billion/ year in the early 1990s (FAO 1996). In the same period, agri-culture's share in total official development finance also fell from 24 to 16 percent. The decline in external funding for agriculture reflected budgetary squeeze in many developed countries as well as the lower social rate of returns to agficultural investments as world com-
rigation development has exhausted locations with nearby sources of surface water and begun to overextract groundwater sources, the cost per hectare of ixrigation expansion has increased significantly (Rosegrant and _vendsen 1993) .......
higher pesticide and fertilizer applications limit the farmers' ability to close that gap. In the meantime, potentials for further technological advance through biotechnology and other sci-
modity prices collapsed in the 1980s. The same factors have also lowered domestic public expenditure for agriculture inmanydevelopedanddevelaping countries. Consequently, public expenditures at the international and national levels for productivity-en-
,
,
Table I
hancing
investments,
specifically
irri-
+_; Deteriorating quality of ProjectedGrowth RatesoFAgricultural research gationinfrastructure and agricultural are reported to have fallen land and water resources. There are and Cereal Production and Demand some evidences that land and water resince the 1980s (Rosegrant and sources are being (In percent) Svendsen 1993, degraded through FAO 1996). World Developed Developing Countries soft erosion, water CountriesTotal Sub-SaharaNearEast Latin East South logging, salinizaAfrica N.Africa America Asia Asia tion of irrigated ProsOer;'l_ io; the lands, and pollu]:aGe.!_c;_;_f'_orr W tion of surface and 1990-2010 (FAO) A number of groundwater, with Agriculture Production 1.8 0.7 2.6 3.0 2.7 2.3 2.7 2.6 recent projection consequent negaDemand b8 0.5 2.8 3.3 2.8 2.4 2.8 2.8 studies for the year rive effects on agri2000 and beyond -- _ultural productiv(Mitchell and ...Ity. Fishery reCereals Production 2.0 1.0 2.1 3.4 2.3 2.3 2.0 1.8 Ingco 1993, Rosesources are overexDemand 2.0 0.5 2.3 3.4 2.6 2.4 2.0 2.1 grant et al. 1995, plaited and forest Alexandratos covers have dwindled in many areas. Resource degradation may be due to agriculrural intensifica-
1990.2020 (IFPRI) Cereals, Production 1.5 Consumption 1.5
t-ion (increased cropping intensity and high fertilizer and pesticide applications) or to rapid growth of other economic activitiesand urbanization under policy and institutional frameworks that essentially ignore environmental effects, _ frontier.
Approaching Maximum •,
technological yield
ceilings |1,
1.0 0.8
1.9 2.0
3.0 3.1
2.4 2.2
entffic breakthroughs, and thus for accelerating productivity growth, are quite uncertain, _ Failing public expenditures for agriculture. Official development assistanc e (bilateral and multilateral) to agriculture of developing countries in constant 1985 dollars has decreased from around ,, i i i
$11 billion/year i
m|
1,9 ..... 1.8..... 1.7...... 1.9-----
1995) provide quantitative assessments of the future food supply-demand balonce. These studies
are based on different methodologies and coverage of commodity groups and projection periods. It is remarkable, however, that they have arrived at generally consistent conclusions at the global level (Table 1), although there may be significant differences for some regions.
in the
-,* P_ ..........
9
DEVELOPMENT RESEARCH NEWS
Philippine Telecommunications... P,_ 1
July - August 1996
Philippine capital market iimitations. There is not enough money in
Scale economies. The telecommtmications industry is a capital-in-
the capital market to finance intensive telecommunications
tensive industry with slow rates of return on investment. Uneven popula-
capitalinfra-
telecommunications facilities. From an economic point of view, there are sev-
structure projects. An estimate in 1991 pegged the capitalization of the Philippine stock market at only 12170 billion. The National Telecommunica-
tion densities and low incomes of target consumer markets in the regions may result in underutilized facilities and late payment of bills by subscrib-
eral factors that tend to influence the underprovision of basic telecommunication services and facilities,
tions Commission (NTC) reports that as of 1995, investments in telecommunications totalled 12125 billion. There
ers, leaving low profit margins thereby discouraging investors.
Market structure. Prior to trade liberalization in 1993, the telecommunications industry was dominated by
is real danger that investment in telecommunications may crowd out the available investment in other endeavors and may have a detrimental effect
Market failure. Corollary to the above, simply relying on market forces in rural areas where population and level of economic activity are small
on overall investment for development. Ahigh foreign exchange requirement for the purchase of imported telecommunications equipment is also a detriment,
will not make possible the putting upd of telecommunications facilities sincl there is no market to speak of.TM Government often fills in to remedy these market failure situations.
the Philippine Long Distance and Telephone Company (PLDT) with more than 60 telephone companies operating on a limited scale within towns and cities in the country. PLDT started operating in 1928 under the Philippine Legislature Act No. 3436 which gave the telephone firm a 50-year franchise
which can be made only through its gateway. It owns and operates the country's only backbone, the public switch telecommunications network (PSTN). A backbone is a main trunk or series of towers using microwave radio that makes long distance calls possible. Other telecommunications companies are only hooked up to this backbone. PLDT also has a strong presence ha the local exchange telephone service. Barriers to entry. The Philippine legislature has the power to vest franchises on telecommunications services and facilities. Entry into the industry, therefore, may require a certain amount of political muscle.Due to the difficulty in getting a franchise, some investors opt to buy into shares of existing telecommunications companies,
Supplyand Demand Situation for Telephones
,
to develop telecommunications services throughout the country. PLDT has a virtual hold on overseas calls
T0bleI
Telephone density and availabil-
Telephone DistributionbyRegion (asofDecember 1995) Region
CAR I II III IV V VI VII VIII IX x Xl Xll ARMM NCR
and
ity. Just how acute is the shortage
of
telephone lines? Government estimated telephone density at less Working Population Telephone than one telephone per 100 perLines Density sons in 1989 which improved to per I O0Pop. 1.7 telephones per 100 persons in 1994 and 2 telephones per 100 16.344 1,329.477 1.230 persons in 1995. The govern_ 27,71I 4,031,023 0.690 ment's goal in the next five years,, 7,685 2,712,823 0.280 is to increase telephone density to 91,624 7,167,045 1,280 at least 10 telephones per 100 per132,114 9,698,447 1.360 24,256 4,490.359 0.540 sons. 47,723 6,155,087 0,780 Meanwhile, public tele82,494 5,277.624 1.560 phone booths set up through the 13,155 3,527,149 0.370 government's municipal tele17,568 2,890,386 0.610 phone program numbered 757 in 23,554 4,111,359 0.570 1994. The number of municipali58,532 5,271,986 I.110 ties (627 or 40 percent out of the 14,593 2,387,999 0.610 total of 1,604 municipalities) with 5,978 846,308
2,098,512 9,117,632
0.280 9.280
telephone access in 1992 increased to 1,164 (72 percent) in 1994. More local exchanges were likewise interconnected to the public switch telephone network (PSTN) operated by PLDT leaving
only
four
local
ex-
DEVELOPMENT RESEARCH NE_WS
changes not connected by 1994.
to the PSTN
Jut1 - August
....... Table 2
Mobile Cellular Phone Subscribers Unrest demand. In 1992, there were 800,000 unserved applications for telephone lines nationwide, 600,000 of which were in Metro Manila alone. The demand was still unrest in 1993 with more than 700,000 applications remaining. At the end of 1995, PLDT had less than 2 million telephones in service.
byCompany
Number of Subscribers
Piltel Smartcom _x_elcom GHCR Islacom
close second with 112,945 subscribers (or 35 percent of the market). Trunked repeater subscribers increased by 214 percent between 1994 and 1995. There were 5,982 subscribers in 1994 which sharply increased to 18,799 subscribers in 1995. Liberty Broadcasting Network captured 33
(asofDecember 1995) Operator
1996
- 202,358 120,378 100.126 41,000 30,000
percent of trunked repeater subscrib _ ers in 1995, followed by Radiomarine with 20 percent.
Opening Up the Telecommunications
Regional disparity. The distribution of phones is likewise highly uneven across regions_ sixty percent of
Industry:
RecentGovernment Policy The NTC, a government quasijudicial body, exercises regulatory au-
heMetro total number of phones are located "in Manila with a telephone density of 9.28 lines per 100 people. The rest of the country has a telephone density hovering at one to less than one per 100 population, There is a correlation between
jumped to 493,862 at end of 1995. The growth rate of cellular mobile phone subscription was a phenomenal 1,327 percent in the period between 1991
thority over the telecommunications industry. It sets rules and guidelines on establishing, operating, and maintaining telecommunications services and facilities. It also supervises, adju-
the level of economic development and the number of working telephone lines. Metro Manila (National Capital Region) which is also the most economically advanced region in the country, has the highest concentration of working telephone lines at 846,308. Southern Tagalog (Region W) is a far second with132,114 working lines. The
and 1995. Cellular mobile phone systems initially hit the market in 1989. At that time, the government granted Pilipino Telephone Corp. (Piltel)and Extelcom franchises to operate cellular mobile telephone systems, in 1993, Smartcom, Islacom and Globe Telecomjoined the fray. At present, Piltel takes the mar-
dicates, and controls all forms of talecommunications services. Policy development for telecommunications, on the other hand, is undertaken by the Department of Transportation and Communication (DOTC). The steady inflow of new players in the once-closed telecommunications industry (see Box) was a direct
egion is home to Calabarzon (Cavite, Laguna, Batangas and Quezon), the fastest growing provinces next to Metro Manila. Cagayan Valley (Region II) and the Autonomous Region for Muslim Mindanao (ARMM), two economically depressed regions, have the lowest number of working lines at 7,685 and 5,978, respectively (Table 1).
ket lead (Table 2).
offshoot of recent government policy geared at market reform. Recent govemmentpolicyontelecommunica_ tions may be summed up as follows:
Source: NTC.
Shift to cellular mobile phones, The demand for mobile cellular types has gone up over the years due to the shortage of fixed telephone lines, which in turn is a result of a growing population base and an accelerating level of economic activity. Although there were only 34,600 subscribers in
Growth ofpaging and trunk repeater services. Paging and trunk repeater services also provided an alternative which further narrowed the gap between the limited supply of fixed telephone lines and increasing demand. The National Telecommunications Commission (NTC) reported that the availability of trunk radio systerns had minimized the operation of illegal radios, There were 201,047 radio paging subscribers in 1994 which increased to 324,816 (or a hefty 62 percent increase) by the end of 1995. Easy Call captured 37 percent of the market with 118,775
1991, the number
subscribers
of subscriptions
while
Pocketbell
was
a
_:_ Policy on universal access through compulsoryinterconnection. Government's response to the gap in telecommunications supply and demand was to open up the sector to more players in 1993. Executive Order (EO) No. 59 issued in February 1993 mandated the Compulsory interconnection of authorized public telecommtmications carriers for a universally accessible nationwide telecommunications network. As of December 1995, -m P_,_ 6
policy
PhilippineTelecommunica6onso..
is contained
in E.O. No. 109
garding the development
of a satellite-
which mandates operators of the lucrative cellular mobile telephone and international gateway facilities services to cross-subsidize and carry out
based telecommunications industry in a competitive environment. DC No. 94-277 issued in July 1994, on the other hand, tackled international satellite
60 interconnections agreements were forged by local exchanges while six interconnection agreements were reached by international gateway facilities. Through this scheme, smaller telephone companies were given access to remote points via PLDT's backbone and gateway facilities. E.O. No. 59 also gave the public the choice to use the toll facilities of PLDT's corn-
local exchange carrier development to underserved areas. The NTC has authorized the following firms to operate local exchange services (LECs): Isla, International Communications Corp. (ICC), Piltel, Major (a subsidiary of Philcom), Philippine Telegraph and Telephone Corp. (or PT&T, an affiliate of Capwire), Digitel, Globe Telecom (GMCR) and Smart. Within the next
commtmications policy and defined the government's position on new satellite-based technologies which aimed to broaden access to international satellite systems.
petitors such as Eastern Telecommunications Philippines, Inc. (ETPI) or Philcom although still using PLDT's backbone. The policy is also expected to spur more investment by the private sector in telecommunications,
three years, these operators are commitred to openup 4,699,279 new lines,
ment-owned or oFerated telecomrnu. nications facilities through public bid ding and included provisions on incentives toward this goal. RA7925 also paved the way for deregulation in the setting of service rates of various telecommunications services which are
Policy on cross-subsidizafion. Another important government
It delineated
,,,. P,_ 5
_',_ Domestic communications policy. In June 1993, DOTC issued Department Circular (DC) No. 93-273 or the domestic communications policy, government
policy
re-
¢0,_Public telecommunications policy act. Republic Act (RA) No. 7925 was enacted in March 1995 and encourages the privatization of govern
presently allowed to compete freely. The rules and regulations implement-
Inventoryof PhilippineTelecommunications Participants Office, are subdivided,into international and do• Telecommunications . mestic operations.. ASof 1995, five com' ' o Pagingoperation panies provide international records car, . . . forms of transmission 'of information r er Servce" namely:. . ' . "'.'E evencompanies are curcentlycomthrough'voice, record or data Over.long ' ' ' ' ' '.' ' ' peting for this viable service: ,. distances primarily through a telephone • Capitol'Wireless, Inc. system. Wecanclassifythetelecommu* .Eastern Telecommunicatibns.Philip• :. Easy Call COmmunicatians'Philipnications industry bytype of service propines, Inc. ' ._ . pines,.Inc. '. ',,',, vided. Broadly speaking, telecommuni° .GMCR,..Inc." .° .. Pilipino.TelephoneCorp. (Piltel) cationsserviceswouldincludethe follow* ° ' Philipoine, Global Communications,' " PhilippineWireless, Inc. (Pocketbell) ing:carrier'scarrierservice, recordscar_lnc_ ° TeodoroRomasanta, Inc. (Digipage) tier service, paging operation, public re° PLDT ' • ..InfocomCommunications Network; .. ... Inc. (Infopage) .'. peater system operation, public coastal O"nthe other hand, six.entities pro-' • Radiomarine Network, Inc./E..M. stationsoperation; radiotelephoneoperavide domestic records carrier'services: tion, cellular mobile telephone system, Orozco(Powerpage) telephoneoperation',very small aperture • OceanicWireless Network',.'lnc. •. E.rmitaElectronics, Inc. (Starpage). terminal (VSAT)operation, gatewayfacil° GMCR,Inc.. " • ' .GMCR,Inc. ityoperation, andbroadcastand CAW.013-. , Philippine Telegraphand Telephone •. Smart Communications, Inc. erations. Corp... . " ° Isla Communications, Inc. (Icon) " • RadioCommUnicationsOfthe Philip-. '° Multi-MediaTelephone, Inc,
i_ I rom a technical 'perspective, ' telecommun cations would,include all
•
Recordscarrier service Recordcarriers transmit facsimiles andoffer telex andtelegraphservices and
i
i'
ii
i
•
,pines ,inc. , ' , 'UniversalTelecommunications Services, i'nc. .... '
ii
'"
'
'
'
"
o 'Public repeaterSystemoperation . . Public mobile radio communications
ing RA 7925 were issued by the NTC in September 1995.
bone or the public switch telecommunications network (PSTN). EO No. 59 called for compulsory interconnection
'..............
Table 3
Sehded Telecommunications Companies' Someissuesrelatedto of authorized public telecorcLraunicaFinondol Performance 0994) tions carriers, thereby allowing deregulation and liberalization The deregulationandliberaliza-
smaller phone companies access to various points here and
tion of the telecommunications sector has transformed it into an exciting industry to watch today due to competitian, mergers, strategies, and counterstrategies of key players, all done in the capitalist tradition (Table 3). Ultimately, competition in the once monopolized sector means better and more innovative service for consumMrs. However, not everything is smooth sailing all the way. PLDT's residual monopoly is still in place to potentially block the policy of interconnection--the connection of lines of different telephone networks with one another. As mentioned ear-
abroad via PLDT's backbone and gateway facilities. However, it has been difficult for new industry players and smaller firms to negotiate favorable interconnection deals with PLDT since it has a stronger bargaining position as the incumbent operator.
lier, PLDT operates the country's back-
-,a P,_ 8
Problems in universal actess policy. EO No. 109 required cellular mobile telephone operatars and international gateway facility operators to put up telephone lines in both urban and
PLDT Piltel Smart Communications,Inc. PT&T GMCR, Inc. JSTelecommunications RCPI Oceanic Wireless Network CapitolWireless Phil Global Communications Eastern Telecom. Phils. Phil Comm. Satellite Corp. ExpressTelecom. Co. EasyCallComm. Phil. DigitalTelecom.Phil. InternationalComm. Corp.
23, I16,439,000 2,546,646,000 146,032,000 472,598,000 453,667,000 258,238,000 172,24.7,000 65,948.000 50,974,000 1,441,660,000 1,200,737,000 756,613,000 643,706,000 454,903,000 259,014,000 219,151,000
Source: Securities and Exchange Commission.
servicesare made possiblebypublicrepeater net_vorks.The government has _rantedpermitsto the followingcompaI_iesto operate publc repeatersystems: • Contel Communications,Inc. • • ° = • •
InternationalCommunications Corp, Uberiy BroadcastingNetwork,Inc, OmninetPhilippines,Inc, TeodoroRomasanta,Inc. RadiomarineNetwork,Inc. CoronaInternational,Inc.
•
Infocom Communication Network, Inc. • Universal Telecommunication Systerns, Inc. •
"
GMCR,Inc.
_
_ Telephoneopellation Sixty-threepriVatecompaniesfunction as telephone operatorsthroughout the archipelago.In_,1995, they include large companies(Digitel,islacom, PLOT and Piltel) and modest ones whichsetvice either a municipality (such as the BalagtasTelephoneCompanywhichsetvices the municipa ity of Balagtas, Bulacan)or a small island (such as the Camiguin TelephoneCooperative). The government directly operates four telephone systems: the DOTCTele-
comingand outgoing internationalphone calls, data or record traffic. By 1995, there were nine entities providinggatewayfacility,namely: PLDT Phil.GlobalCommunications,Inc. EasternTelecommunications, Inc. InternationalCommunicationsCorporation * GMCR,Inc. ° CapitolWireless,Inc. " Smart Communications,Inc. ° Isla Communications, Inc. ° Digital Telecommunications Philippines, Inc. * • " °
WorldwideCommunicationInc. (Radiophone).
communications Office, City of Basilan Telephone, Misamis Oriental Provincial
_ Broadcast and CATVoperations
O Cellulptmobiletelephonesystem . • ExprQsS Telecommunicatioo Co.Inc. " PilipiooTelephoneCorp. • Smar_Communications,inc, • Isla C_ommunications Company,Inc.
Telephone the Municipality of SanJoseSystem,and TelephoneSystem.
.1.995,there were TV stationsAs inof the Philippines, 317 117 AM sations and 289 FM stations.The rosteralso includes 557 CAW stations operated by 391 CAW companiescovering441 cities and municipalities.
•
Gatewayope.ration A gatewayis a toll gate that determinesthe amountto be chargedfor in-
•
al[ematige:
: itica fions:iL0cal: C0mpanies continue [o ta p forei: gn:inv:e._[0r_ ,_ L as p :at[herS ....
:::::::: : :::::;::::::::: :i::::: : ......:::in upgrad:ing:their::facilitie .iAf telephone: :ci ..... _anies: present:; foreign investors in:thetele,:: ....... .... m:mUni:cations: sect0r :inciude: Ko_ : ......
X :::rea: Telecoms: (parmer::0f :Capwire); :Ne_ Zealand: Telecom: :::(Digitel)/ Cabie and:Wireless (b6th:6f:Eas_ern); i:::Mililcom:: (Extel):c0m);: Singapore
...........
ted to:: Shinaw:atra: ..........
.......
:of: Thailand
USA: (Philc0m),
:(Islacom) and Nippon
i:
:::::::(i::::: : :::::::: :::::::::::
:;::Si : ::D:0_G:Three-Yeai Re:p6_ 1992-1995
.....
::i::
i :
i:Cationsfa=: arei_eeded
......
Telegraph :and:i Telephone Corp,[ (Smar:tcom):i: : : : : An0ther: p0ssibi_ o:f; ::outc0me: :capital _d_,g Constrainis will be: the: : potential merger of weaker firms with
d
lee0_¢ations: facili- I ::stronger::players::: : : ,IrC:estimated that :: vested::mtelecom,.,..,,..._,.:, ._, .......... : ...... ............ ................ : :.... : . _demand:for:tele-:: :. ;ilitiesanctserwces: : : mal:ca:pitalinvest-v :..........:
............. :i::_e::;:_
: :: iS
:: :
:mo_ :i:
::fi
....... Asa :result Ofliberalization, more 4. .....:: ...... plaYers---particularly: me: mg on:es_ _ .c .... :.._ ............ ..... : .... eamect: entry l13tothe once narcl.-to=ac; _ : ,..: .... : cess maustry,::tlaus _eve_mg me:play-:
;: : : 2:1: :: ing: field Five: ceiitil:af::ph0ne comp ; that: tile .......... .......: : ....._ ..... .... ' ' :: nies:areinoperafi0n:atpreS¢:nt(from:
the number :6f subsCriberS:ff0m 34;60011 capl_ :.... :3............ .......... _:d: to 495 ;862: Thefe are e e traie ..... ::: in 1991: ...... ...... .... in:1995_ :..... ........... nine international 0pera tors aUtho::: ....... : : rized :by:the:NTC e0mpared :to three) the inaclequacy ot ...... ; ...... :d 92 E1 :it..... before:19, "gt :comd: _ith:the ..... liberal _: whicnexiste .... ..... : ....._ ....... parties prowae: pag:tng serwces.. ....... in.tlUX " ..... ......
)EVELOPMENT RESE ARCH NEWS
, ._,i!;! _•
cal patterns would be much higher than those of developed cotmtries (at
-:Is the growthrateinpopulation will continue to decline;
least double). However, growth rate of demand would be lower than production in developed countries, while the opposite would be the case for developing countries, Hence, developing countries will increasingly become net importers of food, mainly from land-surplus developed countries. That would be due not so much to deteriorating food production-population balance but rather to changing taste preferences towards wheat, livestock (and feed grains), and other high-valued food commodities, Projected import demand of developing countries is relatively modest. Judging from projected trends in world food prices, there would be no food crisis in the next two or three de-
_:_ the proportion of population with relatively high levels of income and food consumption characterized by low income elasticities for food will increase; and _,_ many poor countries or population groups with relatively high income elasticities for food are unlikely to achieve rapid economic growth.
cad.es. Two separate world price projections presemed in Table 2 indicate a continuing decline beyond year 2000. In fact, recent estimates of world price effects of ag1990 995 2005" 2020'" ricultural trade liberalization expected to occur in 100.0 I 13.5 98.8 the mediumand longterm under the overall di100.0 100.0 90.I 100.0 103.8 81.2 rection of the World Trade 100.0 87.8 Organization show these 100.0 74.3 increases to be relatively 100.0 78.0 modest. These are typically less than 10 percent, and tiros would not be 100.0 BO.5 I00.0 78,4 sufficient to reverse the 100.0 84.6 projected declining trends 100.0 77.I in real world prices, The declining real 100.0 90.1 world food prices in the face of slower growth of
assessment oftheworld food situation contradicts Brown's alarmist prediction of China and Africa's cereal deftcits by year 2030. Although Brown's projection period extends up to 2030, import demand projections into the early 21st century in other studies are much lower. Brown's projections were not based on any explicit demand and supply 'modelling effort but on certain assumptions about growth in population, demand per capita, and production. In contrast, the other studies were based mostly on econometrically derived demand and supply models, and
Food Crisis Loomingo,o P¢,_, a
Cognizant of the above food supply constraints, all of these studies indicate a continuation of the historical slow down in production growth rate. Compared to the 1980-1992 growth rate of 2 percent, agriculture into the early 21st century is expected to grow at about 1.8 percent per year, and cereals at a somewhat lower rate of 1.5 percent. Growth rates of production (both agriculture and cereals alone) and consumption among developing countries as consistent with the histori-
Table 2 Proiected Trends in Real World Frices of AgricuJtural Commodities (1990 = 100)
World Bank Agriculture Food Cereals Rice Wheat Corn Rosegrantet Cereals al. Rice Wheat Corn Meat
.July - Au!lust, 1996
' Based onactualprices, " Basedon projected prices, Sources: Adopted from: WorldBank. Commodity Markets andtheDeveloping Countries, A WorldBenkQuarterly, 1995. Rosegrant.M.W., M.Agcaoili.,_mbilla, andN. D. Perez. Global Food Projections to2020:Implications forInvestment. International FoodPolicyResearch Institute,1995.
production suggest that future world demand for food, particularly cereals, will also increase less rapidly in the future than in the past for the following reasons:
In addition, the projected gap in food. production and demand in developing countries will not substantially widen because the resulting higher world prices in. the short run will induce increases in domestic production. The Case of China and Africa The aforementioned prospective
experts' judgments on the prospects for technological change and other factors affecting growth of cultivated area. and productivity. Except for the Huang et al.'s study which was liraited to China but based on the most detailed country modelling effort, the other studies used a complete world demand-supply framework. The most conservative projection of import demand was by Rosegrant et al. at 22 million tons by 2020, almost equal to the FAO-Alexandratos and
12000 :and
:2030i
:i
miiii0n::to:*
:indic:a i
::i::27
:
5 mi.ili0fi: ions: in:2020_ ,g :i ::Alexandrat0Sll a_di:de Haen ...........Ofpro-i: :(i:995), in i jectiOn:: is :nOt: to: b:e taken:: Seriouslyi:{;; g :domeStic prod uc tion :grows i out: ii i:percent ilaf: the sa me: rate of:::pOpula:tion; fit a [:
a :net:
if from itsl :fali:
........
: ii
tly exag-such a conSumpfiOn leVel:by::theni ........... which does not seem t6 bea realistic: alp6r:t: de_ i::whiCh
:
level Ofnet imports would per., imply a piia consumption Ofi2901kilograms; i pefCentl increase between 990 mid:2030 Sub2Saha fa :,_rica mus
prospecti.: On thel other:il l_and,if: eon_ st_pti0n percapitais:assumedto:re 2: n:cOnstant; _e implied prod.uction
_ Would::only be 34 kil0gfams; an unbe2 : ithe Same: growthl : lievabi_: lower :ilevel:i Of grain produc2 ::be:_eefi:::2010:: tion peel Capita e6inpared :to the curi:ab0ut 50 i rent level:of:140: kil0gr:amsi :: : .....:: ..... i: ai/s mod_ i:: : net rain ,_;;_ _: _ ,:
DEVELOPMENT RESEARCHNE_VS
I
11
.
"
Histo rical o .....
Production
verview
,,,
July- August1996
,,
,,
'
ture of.rainfed conditions, Sub-Sahara Africa.was largely bypassed by'the, green
Despite growing land constraint, glo-' bal food production has' generally out-
revoiution 'technology. Moreover, pervaSive government interventions in agricul-
paced population growth, increasing food production per capita by.18 percent within the past 30 years. Annual growth rate of 4=codproduction declined over the period, from 3..0 .percent in'the 1960s to 2.3 percent in the 1970s, and down to about 2.0 'percent between '1980 and early 1990s. But so has population growth rate
tural outPUt' and input markets have dePressed incentives, and limited government' resources to' finance productivityenhancing, investme.nts ,'in this region. ' ' ,...' '. '
food production per capita, drop especially the sharp among the Eastern 'European countries due to transition problems encountered in the.shift
F,ig,ure] Trends"in T0tol,Food and
Cerecll
Availabilityby,Reoion
which fell from 2.1 tO 1.9, and 1.8 percent, respectively. Th',e , apparent ,, , ,slowdown of world food' production per capita, by the 1980s has been caused .mainly by the downward trend in developed 'countries'
,
has been'declining since the 1970s, Becahse of the low rate of , irrigation and unfavorable na,
demand, in turn,, ,depends Primarily on 'population, income per capita, and degree of urbanization. , , , ,,, '. . World food' ava'ilability for direct h'u...man. Consumption in daily'.ca or es per capita, as a measure, of 'per capita effective demand, has increased over the past .three. decades. This.growth is lower than .the growth of per capita food production, because an increasing proportion of that' . ..' production is fed to animals and indirectly .consumed through livestock, and dairy .products. Available food, however,,i's dis-. tributed unequally, as dai'ly per capita food consumption among developed countries' ,,,is about 3300 calories compared to about
Among,DevelopingCountries, , ,"
,
,
,
' "
,',
Totalfood
Cereals "
callcap/day 31oo--
cal/cap/day 21oo -NE_.d No.h^1,,o_ ..... •
29oo
/
..
.......,..
......
19oo
East 'Ael=
_
'.
, //
2700
LAtlI1 Ametlc_
2500
"
...
/
..
/'-
/-_---/
._/f--
2aoo
//_-J
17oo
........
t" Esst^sla
..:..::/
NE lind North A|rlo,
15oo
,..,..
i
• ,.
...::___.,.,., ......... ;"'
....•
f
. ....
/
,'"
lsoo
,
South
Asia
/,"
from a Socialist to market economy, By contrast, the growth performance of per capita
21oo
19oo
9oo
food production of'developing countrieswas higher and consistently on an upward trend,
17oo
7oo
The remarkably strong growth record of
_ lOO y
L.tln America
___ .f_._--_
_soo 1961
1966
1970
1976
1980
' ' .' .
1992
5oo 1961 I..,.L_I..=,....... 1966
... ...
per capita food production was not, however, achieved uniformly across developing regions. The highest growth rate occurred in Asia due i.n.part to the green revolution.in rice.and.wheat, and in part to the policy and i.nstitutional reforms in.
"
1970
1978
1980
"_---
1966 _.,.L._.LJ_
1992
'. "
'
. .': . ."International trade' allows growth in .food consumption to be'higher, than do.mestic food. production in countries .with 'to w comparative advantage in agriculture,
transition economies Such.as China and ' Vietnam. While per capita food produc/ tion in Latin America showed some small' increases and remained just about constant for'northeast and north Africa, the poorest performance Was by Sub-Sahara ... Africa where per capita, food production'
1986
_---_
.....
ConsumPtiO n
2500 among develop ng 'c'ountr es in the early 1990s..]'hat difference has actu: ally narrowed from nearly 60 'percent to. less.than 40 percent as per capita food availability in developing countries grew annually at a faster rate (3.0%) than de-
It also stabilizes food availability and prices, and facilitates a wider range of food choices as comparative advantage, in particular,..food commodities, depends ' much on..'factor endowments" and . I.ocational factors. The'level 'and compo-
veloped countrie s (i.4%) because income elasticity of food demand decreases at higher income levels, indeed,,per capita cereal ..consumpt on in developed countries has declined in absolute terms while
,,, sitj'on of food consumption
or effective
',,
'
,._ Pc._ Z2',
]Historical Overview... p_
f!
that of developing countries increased as consumption patterns shift towards livestock, fruits, and other high valued products when per capita income rises,
percent by 1990. However, ÂŁhat 20 percent still represents a sizeable number--
Developed countries have increased export shares because of the inherent
nearly 800 million--of undernourished population. Although considerable progress has been made in bringing down the rate of undernutrition in East and South Asia, these regions continue to account for two-thirds of total undernourished. In Sub-Sahara Africa, the number
comparative advantage in agriculture of land-surplus countries in North America and Australia, and also because of subsidized exports of highly protected commodities in the European Union and other developed countries.
Figure i shows that wide differences in daily per capita food availability exist among developing countries with SubSahara Africa having the lowest (only
of undernourished are increasing rapidly, at a rate even higher than population
2100 calories per capita) and Northeast/
37 percent between 1970 to 1990.
North Africa the highest level (3010 calodes per capita). Growth rate of per capita food availability was highest in North East/North Africa and East Asia, reflecting the rapid pace of economic growth in these regions. Since the 1980s, food availability in South Asia has also grown rapidly. With the poor overall economic performance of Sub-Sahara Africa, its per capita food availability has stagnated, declining slightly over the past 30 years.
growth in the region as the proportion of undernourished rose slightly from 35 to
International Trade With the exception of the mid-1980s, agricultural trade has generally grown
Although developing countries have become more import dependent on food,
....... Figure 2 Growlh
o_ AgriculluraJ
al]r__Output,
Trade
] 963-1993
(Percentage Chc_n_je m Each
Ferio_{}
(%) 25 II 20
'
Trade '
Output
The progress in addressing food availability problems is remarkable in the light of the near doubling of population. Whereas 80 percent of the population of developing countries lived in areas where per capita food supplies were extremely low--under 2100 calories--this ratio is now down to less than 10 percent. The nature of the food problem, however, depends not only on the average level of
15
10
i_ .,, kk'
5
_
food availability or consumption but on the distribution of such supplies within each country. FAO's estimate of incidence of undernutrition considered both average and distribution of food supplies in deriving the numbers of persons in developing countries which can be considered as chronically undernourished. The latter is based on some notion of nutritional threshold level (ranging from 1760 calohecapita/day for Asia to 1985 calorie/ capita/day for Latin America) which is set equal to 1.54 times the basal metabolic rate (Alexandratos 1995).
_ _,, 0
1963-68
1968-73
1973-78
1978-83
1983-88
1988-93
Source:GATT,International Trade,1985-86and1994. faster than production, contributing to the
the proportion of agricultural imports to
growing integration ofthe world economy (Figure 2). The share of developing countries in total food imports has increased to 28 percent, while their share in food
total merchandise imports have substantially diminished from 2'5 to about 10 percent by 1990. In terms of food imports, this ratio currently represents only about
The proportion of chronically under-
exports decreased from 30 percent in 1974 to 26 percent in 1994. Consequently, most developing country regions have become net importers of food, ex-
5 percent of total imports in South and Southeast Asia, 10 percent in Latin America, 12 percent in West Asia, and 15 percent in Africa. It should also be
nourished population declined significantly, from 36 percent in 1970 to 20
cept for Latin America which remains a significant exporter,
emphasized that increased import demand has been largely induced by chang-
Looming.+
reported because official data on land area have been reportedly understated
Production Potentials Although most analysts have contradicted Brown's alarmist scenario, they have nonetheless generally
by as much as 30 percent. This suggests a considerable scope for increasing grain yields even at the same level of teclmology because government grain prices, particularly rice, continue to be undervalued despite liberalization of retail prices (Huang and David 1994). Gale Johnson (1993,) indeed lamented
taken a conservative estimate of future production growth. Alexandratos (1995), for example, pointed out that average growth rates of per capita ag-
that China does not have a grain problem but a series of policy problems in the pricing and procurement of grains. Furthermore, the full benefits
ricultural production of developing countries, as a whole, have not been
from a private economy have not been obtained asfarm households donut as
1970s as a result of the sharp increases in worldcommodityprices in 1972 and
generally compared
1973 turned out to be a short-run phe-
true for countries
which have low, as
yet have full property rights over land, as is also the case in Japan, Taiwan, and South Korea_ As labor becomes in-
nomenon, as world prices collapsed in the late 1970s and1990s. continued its downward trend into the A confluence of events caused that price peak includingthe productionshortfalls in SouthAsia and many SoutheastAsian countries, the short cereal crop in the US, Europe and former USSR, and the failure of the Peruvian anchovy catch which is a major source of protein for livestock. Allof these were due to adverse weather conditions, TheUSSR'sdecision shortage was also exacerbated by the to increase grainim-
well as high, shares of agriculture in their total economy. And with the ex+ ception of China, growth rate of per capita agricultural production in the more agriculture-based countries accel erated in recent years, particularly in South Asia. Alexandratos further argues that the slow down in agricultural growth since the 1980s primarily reflects production adjustments in the main ce-
creasingly scarce and larger farm sizes are called for to facilitate adoption of labor-saving technologies, voluntary, market-driven ]and transactions pussible only with full ]and property rights system would be the most efficient means of adjustment to that farm production structure. In Japan and Taiwan, that adjustment was initially addressed through part-time farming. That route, however, has now ex-
ports, rather than to accelerate the slaughter of livestock as a response to :he fall in domestic grain production, _uickrecoverywas alsohamperedbythe
real-exporting countries in response to low world prices, the need to control the growth of stocks, and the transition problems encountered by Eastem
hausted its limits and therefore large inefficiency costs are incurred with the continued prohibitions inland market sale and rental.
Europe. That flexibility implies that production can also be easily expanded when shortfalls in supplies The declining trend in agricultural raise world market prices. The agriculterms of trade was caused in part by retural trade liberalization underway duceding theimp째rtsuccessdemandof thef째rgreenCerealSrevolutionf째ll째w would actually increase flexibility in technology in many parts of Asia, generdomestic production adjustments and ally depressed world economy, and growchange world market conditions. ingprotectionismcoupledwith subsidized There are also reasons to believe exports in many developed countries, that higher productivity growth in Even with the recent increases in world developing countries can be promoted grain prices as import demand rose and further by policy and institutional reworld stocks dropped, the long-term deforms and by greater public investclineofworldagricultural andcerealprices
In other transition economies, such as the former USSR, Burma, and Cuba among developing countries, potentials for accelerating food production are high since the process of dismantling and reforming socialized agriculture has only begun recently. State-owned enterprises continue to act as monopolists and monopsonists in output and input markets, and the domestic economy remains insulated from international trade developments. For the former Soviet Union,
in real terms have not been significantly altered. _
the transition to market economy will significantly reduce crop waste and
ing preferencestowardswheat, livestock (and, thus, feed grains) and other high valuedfood as incomesincrease.Developing countries as a whole tend to have much less comparativeadvantagein producingthese commodities domestically. International trade has thus enabled them to meet increasing levels and changing patterns of food demand more cheaply, World Prices The historical long-term decline in the agricultural of trade inglobal word markets reflectsterms the adequacyof food supply relative to effective demand. Perceptions of a world food crisis in the
Foo,lCrisis _
Pc__,'o
lower in the recent years to earlier periods. This is
sharp increases in domestic prices of fertilizer,with the oilfarmcrisismachinerieS'in 1973. and energy
ments in land and irrigation development and agricultural research. In China, for example, average grain yields are not so high as previously
-., P_
1#
Implicationson FoodSecurity
FoodCrisis Looming...
What do these prospective foodsupply-demand balances mean for
c.- Po9, ta
food security? To many countries, food
Food security as defined in recent FAO documents means a situation where all households have the physical and economic access to adequate food for all members. That is, food
losses in harvesting, marketing, tr,,Lsporting, and processing agricultural products, and increase productivity of feeds livestock production (Johnson 1993). inThe rice economy of Burma, the
security is often equated with self-sufficiency, particularly rice self-sufficiency. To others, food security can be pursued by being self-reliant, that is, relying international if thatof will meanon more efficient trade allocation
should be characterized by availability, accessibility (income and price), and stability (supply and prices). This should prevail not only at the global and national levels but most important at the household level. Food insecurity is not so much a question of availability of food supply or adequate domestic production, but one of effective demand or sufficient level of income,
leading rice exporter in the early 1900s, can be quickly revived with appropriate policy and institutional reform, following the experience of Vietnam, which became the third largest rice exporter soon after removing central
resources, and thus greater national income and more stable domestic supply and prices as domestic production is inherently unstable, The debate between the two deftnitions is rooted on fears about riski-
state monopoly on international in rice and agricultural inputs,
trade
ness of relying on international trade because of perceived instability in
particularly in poor countries. Food security, therefore, is a question of the rate of economic growth and distribution of income within countries, rather
Outside the transition economies, considerable scope for improving allocative efficiency in agriculture,
price and supplies in world markets and possibilities of politically moti-
than the level of food production. Of course, there are still countries where food and agricultural production continue to be the main source of
"U/iereare reasoHsto bdkv¢t/lat i9 ¢r froduetivity • growtttin devdo#HgcouJltriescanbepromoted/urt#er by pOlic arid/ilst/tutioHalre/arms..." •
DOTC
income for the majority of the population. Hence, rapid growth of food production
and food security
means
the
s_e thing Inthese countries such as thosefor inthem. Sub-Sahara Africa and
particularly in grain crops, remains. In many developing countries, govern-
rated trade embargos. These instabilities have been reduced by the devel-
South Asia, pr0ductivity-enhancing public investments, and appropriate policy and institutional frameworks for accelerating agricultural development are critically needed to increase
ment parastatals continue to incur high budgetary costs in procurement, storage and marketing of grains which could have been better spent on productivity-enhancing investments. At the same time, these market interventions distort seasonal and geographic price variations and domestic price level away from their social opportu-
opment of future markets and expansion of transport and handling facilities for international trade while further reductions can be expected with the agricultural trade liberalization under the WTO. Moreover, food is supposed to be exempted from political trade embargoes; trade embargoes can easily be overcome by third country
income and alleviate food insecurity. For other developing countries, the issue related to food and agriculture is how to alleviate the burden of adjustment of the farm sector as comparative advantage in food and agricultu_ral production declines in the process of economic development, particularly in land scarce countries. In
nity cost and prevent the domestic food economy from being more integrated into the world market. Yet,it has been well established that even for large countries, the lowest cost and most effective approach to national food security is through the use of international markets, with a modest domestic storage program (Johnson 1991).
exports; and WTO can nowbe another instrument for preventing food trade embargoes. Governments espousing rice self-sufficiency in the name of food security are now, more often than not, motivated by the objective of protecting farmers---Japan, South Korea, and the Philippines.
Japan, Taiwan, South Korea, and many European countries, that burden has been alleviated by •increasing agricultural protection. But with the establishment of the WTO, the use of that policy instrument will not be permitted as developing countries lose comparative advantage in agriculture. (_
i
,i i i
i
.
i|.
References
sibility
AlexandrOtos,Nicholas (ed.). World Agriculture: Towards 2010. Food and Agriculture Organization (Rome) and John Wiley and
players
compet-
Philippine 'J[+_lecommunica6onso.
ing
_ p,_,# .....
operating a network of 300,000 or 400,000 lines, for example, may not be
Sons (New York, Chlchester, Bresbone, Toronto,Singapore),1995. --
of too many
in a
capital-intensive
profitable.
and H.Will DeHoen. "WorldConsumption of Cereals: It Double by 2025?" Food Policy 20, No. 4, 1995. Brown, Lester."Questionsfor 2030: Who Will be Able to Feed Chino?" and "When Chlna's Scarcities Become the World's Problem," International Herald Tribune, 28 and 29 September ]994, respectively, Crosson,Pierreand J.R.Anderson."Demand and Supply:TrendsInGlobal Agriculture," Food
Easycall has over 100,000 subscribers, Piltel's Beeper 150 has more than 47,000, and Pocketbell has more than 112,000. Telephone density has also ira-
Polloy 19, No. 2 (1994; 105-]19), Food and AgricultureOrganization. "Food and InternationalTrade." Technical paper forthe World Food Summit,Food and Agriculture Organization,Rome, ]996.
a
sector
where
Of the 11 service areas des-
ignated by the NTC, only four include parts of the lucrative Metro Manila area where PLDT's main lines are elm
Pc,q,./6
proved as a result of liberalization. Partly due to pressures of competition from new players, PLDT has launched
program to address the backlog telephone demand. Telecommunications
services
in Vol. XlV No. 4
July-August1996
are
gaining a foothold in the countryside , "Food,Agriculture,and FoodSecurity: due to the service area concept. Under TheGlobal Dimension,"Technicalpaper for this concept, telecommunications car-
__.
the World Food Summit, Food and AgacultureOrganlTatlon,Rome, 1996. ,
riers were assigned a mix of profitable and unprofitable service areas such
Dr. PoncianoS.lntal, Jr. President
"FoodSecurltyAssessment,"Technical paper fortheWorldFoodSummit,Foodand AgflcultureOrgdnlzatlon, Rome, 1996.
that ICC, for example,
Dr. Maria B. Lamberte Vice-President
to service
both
was assigned
the Bicol
region
and
Huang,Jlkunand C.C. David."Policy Reformand Agricultural Incentives In China.* Unpublishedpaper, 1994.
QuezonCity while Globe Telecomhad
-,S. Rozelle,ond M.W.Rosegrant. "Chlno's Food Economy to the 2]st Century: Supply, Demand, and Trade." Unpublishedpaper, 1995,
pected to cross-subsidize their operatigris through international and do-
Johnson. D. Gale. "Does China Have a 4, Grain Problem?" China Economic Review No.
The following general recommendations will further ensure that
Central Mindanao Telecommunications
mestic
toils and cellular
1 (]994: 1-4).
gains
"Trade Effects of the Dismantling the SoclallTedAgricultureof FormerSoviet Union.*Comparative Economic Studies35, No.4, 1993.
squandered:
Mitchell, Donald O. and M.D. Ingco, The World Food Outlook. Washington D.C.:WorldBank,
and Makati City. carriers are ex-
from
_
market
services.
reforms
are
Presence of a strong govern-
N.D.Porez. Global Food Projections to 2020: Implications for Investment. International FOOdPolicyResearchInstitute.1995. and M. Svedsen. "Asian Food Production Inthe 1990s:IrrigationInvestment and Management Policy."Food Policy 18, 1993.
iii
m,,
=m,
not
allow
itself
tured" by the regulated larly PLDT, and should tween
Hs.Andrea S.Agca0ili Directorfor Operationsand Finance Atty. KoqueA..Sorioso LegalConsultant Scat((
ment adjudicator. Liberalization may bring unfair trade practices and preda-
ExperimentStationand FarmerYields.*IRRI should
Directorfor ProjectServicesand Development
not
]993. tory behavior on the part of dominant Plngall,P., P.Maya, and L. Vel_co. "The Post- firms. In this context, the NTC is in the Green Revolution Blues InGap Asian Rice best position to address the issue. It Production: TheDiminishing Between Social Science Division,LosBafios, 1990, Rosegrant, Mark W., M. AgcaollI-sombllla, and
Hs.Jennifer P.T.Liguton Directorfor Research Information Hr. Maria C, Feranil
competitors
to be
"cap-
firms, particuadjudicate be-
with
only the pub-
lic good in mind. There should also be continuing legislation on how to further improve the sector. 0 An anticipatory role for government. There
,, ,"
planning is the pos-
JenniferP.T.Liguton Editor-in-Chief Genna J. Estrabon Issue Editor CorazonP.Desuasido and Ha. LourdesM.Salcedo ContributingEditors ValentineY. Tolentino and Rossana P. Cleoras Exchange DeliaS.Romero.GalicanoA. Codes, NecltaZ. Aquino and FedericoD. Ulzame CirculationandSubscription jane C. Alcantara Lay.outandDesign .
-',
•,
DEVELOPMENT RESEARCHNEWSisa bi.monthly publication ofthePHILIPPINE INSTITUTE FOR DEVELOPMENI_STUDIES(PIDS). It highlights the findings and recommendations ofPIDSresearch projects andimportant policyissues discussed duringPIDS seminars. PIDSisanonstock, nonprofit government research institution engaged inlong-term, policyoriented research. Thispublication ispartoftheInstitute's program to disseminate information to promote theuseofresearch findings. Theviews andopinions expressed herearethoseoftheauthors anddonotnecessarily reflect thoseoftheInstitute. Inquiries regarding anyofthestudies contained inthispublication, or any of the PIDSpapers, as wellassuggestions or comments are welcome. Please address all correspondence andinquiries to:
Thefiature ar_ide in this issue by Uniw_sity of the Philippines Schoolof Er_v_ (UPSE) ]_of_sor _perto P Alo_ andante ._L_v_t V_7_rr_ San Pedro discusses the current
Research InformationStaff Philippine Institute for Development Studies Room304,NEDAsa HakatiBuilding. 106Amorsolo Street,Legaspi Village 1229Makati City,Philippines Telephone Numbers 892-4059 andB93-5705 TeJefax Numbers (632)893.9589 and816-1091
government for the indus_ will con_n_ to be b_n_J to the co_u_ and the indml_/ _ a whole. The other arvicle in this im_e is writ-
E-mail Address: jliguton@pidsnet.pids.gov.ph
ten
Philippine Telecommunications.. Po_/J
ready concentrated. The less populated areas will not be as attractive to operators. As the sector becomes more crowded, mergers and acquisitions of a few remaining big players are foreseeable scenarios in the next few years. •Government must not rely solely on the information fed by major players, Rather, it must have a source of infermarion that is not only independent and reliable but also one step ahead of industry players so that it can monitor and anticipate possible unfair trends trade practices and uncomperitive strategies. It must set the direction the telecommunications sector as ofa whole with the consumers in mind. It must likewise forecast alternative future scenarios in response to firm mergers and thereupon formulate appropriate policies, •
!
te_c_unica_ons s_ in thecountry and enumerates the problems that plague the industry. The paper also recom_ measures to ensure that the market
Straightening kinks in the nnection problem. The di-
lemma of interconnecting telecommunications companies should be resolved. One response has been through the 1995 NTC directive which assigned three-digit access codes to all telecommunication players. The NTC believes that this will guarantee no special treatment to any particular firm. O
A second backbone
reforms
initiated
by the
by PIDS Research Fellow Dr. Cris_ Da_L It boks inw the _rm-
Re-entered assecond class mail attheMakati Central PostOffice onApril27,1987. Annual subscription rates are:8150.00 forlocal subscribers; andUS$20.00 forforeign subscribers. All ratesareinclusive ofmailing andhandling costs. Prices maychange withourpriornotice,
interc
_,_ P_
for the
country. Putting up a second telecommunications backbone will provide additional trunk capacity, universal access and interconnecrion. The implications, however, include competition in local service for PLDT based on effi-
_ projections made by Lester Brown regarding the declining cerealproduction of China which is said to create a global food c_sis in the next century. David, however, cites several studies which contradict Brown's allegations and says that the current concerns on the food production condition actually stemmed from severalfactors such as dcdining per capita and quality ofland and water resources. FolLowingthe Food and Agricul_ure Organization's (FAO) definition, David looks into the issue of food secu_ty not from the standpoint offood pro-
duc_n levels per se lrut rather in the context of economic growth rate and dhtri_rion ofincome within countries. Food security is thus one issue that will be conctantly tackled in forthcoming srminars and amfirences related to the Asia-Pacific Economic Cooperation ciency in service. @ (APEC) and the General Agreement on Tariffs and Teade (GATT)-World Selected References _ Organization (WTO). Fortuna, Marlcon. "Telecommunications Industry: WIrlngthe Philippines.'In Ma_atl Business Club Economic Papers,Volume14, No.6 (Juno 1994). Service Reyes,Ma. Angola."ThePhilippine Tele•through Research communicationsindustry:Deregulation Pains." Center for Research and Support Communications StaffMemos(No.6,1993). NationalTelecommunicationsCommission. Philippines 2000 AnnoolRepo# 1995.