TCR Volume 1 Issue No 4

Analytic Research by the Center for Strategy, Enterprise & Intelligence

We are ready to start the fight in Tripoli and everywhere else, and rise against them.

~ Sept. 8 audio message, supposedly from Libyan dictator

Muammar Qaddafi, issued from somewhere in hiding

Libyan Transitional Council Prepares to Move Its Capital to Tripoli.

~New York Times Sept. 9 headline

Vol. 1. No. 4 • Sept. 25 - Oct. 1, 2011

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02 Can Anyone Clean Up Customs?

?

Only if they’re willing to confront a culture of corruption

• Speeding up trade

10 Failure of an Institution:

Office of the Ombudsman

Will 100 good lawyers fix what’s wrong with the government’s anti-corruption agency?

• High-profile cases to test the Ombudsman’s mettle and resolve

• Divorce in the wellspring of Catholicism

18 The World’s Last Divorce Debate

Does the Philippines need a divorce law?

• When the Philippines allowed divorce

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35 Renewable Energy:

Please Fly In

The Technologies

A look at not just the wave of the

Will open skies bring in more tourists?

future, but the sun and the wind as well

40 The Power and the Pitfalls of Social Media

Is social media facilitating rapid change or just fostering an illusion of activism?

NEWS ON THE NET

23 Welcome, World,

• Phased approach recommended for ASEAN

30 Why Filipinos Don’t Save

A look at factors that impact savings in the Philippines

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3 new poll fraud witnesses surface

Qaddafi breaks silence, denies he fled Libya

US traders expect expansion of Philippine economy

UN chief regrets lack of terrorism convention

DA sees no need to import more rice this year

Global growth forecast to be lowered by IMF

Competitiveness improves

PPP Center chief resigns Peace panels to resume talks

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Center for Strategy, Enterprise & Intelligence provides expertise in strategy and management, enterprise development, intelligence, Internet and media.

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Can Anyone Clean Up Customs?

Only if they’re willing to confront a culture of corruption

By Marishka Noelle M. Cabrera Before Angelito Alvarez ended his term as Bureau of Customs (BOC) commissioner on September 16, he advised his successor to prepare for “politics” in the Bureau. Not that his successor needed political lessons.

After all, Rozzano Rufino “Ruffy” Biazon, son of former armed forces chief and threeterm senator and incumbent Muntinlupa Representative Rodolfo Biazon, held his father’s congressional seat for three straight terms in 2001-10 and ran unsuccessfully for the Senate in the May 2010 elections.

Nor did the University of Santo Tomas medical technology alumnus need to be told how daunting the challenge he took on at Customs. “This is a make or break assignment for me, with a challenge much greater than others I have faced before,” he said in his initial statement on his BOC appointment posted on his website. His first steps, as told to media: performance reviews and lifestyle checks for Customs personnel,

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plugging procedural loopholes, and a plea for business people not to offer bribes.

First moves: Performance and lifestyle checks. Clearly, the new customs chief has his work cut out for him. Recent revelations serve as mere reminders of even bigger problems facing the Bureau.

Smuggling and corruption have long plagued the BOC and tarnished its image in the most irreparable ways. Mention the BOC and images of corrupt officials, “grease money” dropping into open desk drawers, and painfully slow processes are conjured up, and, sadly, not without good reason.

Not to mention the biggest spate of smuggling in Philippine history, with more than 5,000 containers admittedly lost in transshipment between Manila and other ports. Moreover, revenue collections from the BOC fell 8.6% or P11.85 billion short of the P137.9 billion target in the first half of

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Can anyone clean up customs?

this year, the Inquirer reported.“[Alvarez] had a year to do the things that I have tasked and I’m not satisfied,” President Benigno Aquino III told the press.

Too corrupt to change? Countless studies have documented and analyzed the sleaze at BOC. In “Too Corrupt to Change? The Battle to Reform the Bureau of Customs”, the Philippines Public Transparency Reporting Project says the BOC has long been seen as “a netherworld of corruption with little or no respect for existing rules or laws … a world of syndicates which operate in a deeply entrenched system

that knows only secret codes and unwritten rules.”

“Democratic Deficits in the Philippines: What is to be done?” presents the BOC as the most corrupt national agency, with an abundance of opportunities, irresistible rewards, low-risk schemes, twisted values, weak controls, and a compromised justice system, among others. At almost every level and function, there are many opportunities for corruption, as described in Chapter 4 of the World Bank’s Customs Modernization Handbook (see table below).

Customs Functions and Their Vulnerability to Corruption Examples of Integrity Violations

Selected Customs Functions Processing of import, export, and transit declarations

Assessment of origin, value, and classification of goods

Physical inspection, examination, and release of cargo

Administration of concessions, suspense and exemption schemes, and drawback schemes

Conduct of post-clearance audits Issuing of import lecenses, warehouse approvals, and authorized trader status approvals Processing of urgent consignments

Soliciting or accepting payment to • accelerate the processing of documents • ignore the fact that some cargo listed on the manifest was not decalred • certify the exportation of flictitious exports or provide for wrong hS classification • permit goods in transit to be released for domestic consumption.

Soliciting or accepting payments to • permit under-invoicing of goods • not challenge the declaration of goods under a different HS that attracts a lower tariff rate • accept a false country of origin declaration, thus permitting the importer to benefit from a preferential tariff regime Soliciting or accepting staff who would • ensure that an inspecting officer is chosen who will take an accomodating approach to the inspection • skip the inspection • influence the findings of the inspection • simply speed up the inspection Soliciting or accepting payment to • permit tradrs to release, for domestic consumption and without paying the required import duties, goods that entered under dudpense regimes or goods made with inputs that entered under such regimes • permit traders to claim drawbacks or fictitious exports • permit importers to transfer imports that benefited from duty relief to nonauthorized users or for nonintended purposes, or permitting them to import such goods excess of the amounts sgreed to.

Soliciting or accepting payments to influence the outcome of the audit findings.

Soliciting or accepting payments to obtain these licenses and certificates without proper justification Soliciting or accepting payments to obtain preferential treatment or speedy clearanceh

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Can anyone clean up customs?

Among the countless kinds of graft, as cited in the Bank report: speeding up the flow of papers, ignoring discrepancies between cargo manifest and customs declarations, certifying non-existent or mislabeled exports, allowing goods for export to be sold locally. In cargo inspection, there are payoffs for assigning accommodating inspectors, canceling or rushing inspections, and falsifying findings.

For a bribe, according to the Bank report, security bonds can be canceled even before the payment or liquidation of duties they were meant to secure. Auditors are also induced to certify that cargo released had complied with declarations and duties.

Import licenses, warehouse approvals and urgent shipments are also the subject of payoffs.

Anatomy of corruption. Custom corruption falls under two categories.

In “Challenges to Philippine Culture of Corruption: Causes, Consequences, and Change”, Dr. Edna Estifania A. Co of the University of the Philippines speaks of “virtual smuggling where there is collusion between smugglers and Customs people” and technical smuggling in the form of “under­valuation, misclassification, and

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misdeclaration of goods”. She adds, “corruption is a transactional thing – it involves both the bureaucrat and the client, government and business, or government and the citizen. It spills over the bureaucracy and onto the society.”

“Corruption in the Philippines: Framework and Context” by Co’s fellow UP professors, Emmanuel S. de Dios and Ricardo D. Ferrer of the Philippine Center for Policy Studies, explores the various facets of corruption.

Inadequate compensation for public officials could attract those who would make some real money the dirty way.

Thus, report de Dios and Ferrer, “bureaucrats of agencies such as the bureau of internal revenue or the customs may be observed to be curiously attracted to careers that obviously offer little by way of legitimate pay, in the conscious knowledge that the differential may be made up through corruption and other forms of postcontractual opportunism.” In short, low pay attracts low-lifes.

After a couple of days on the job, Customs Commissioner Biazon spoke of cracking down on corruption, citing President Benigno Aquino 3rd’s twin marching orders of raising revenues and eradicating graft.

The new BOC chief also warned bribebrandishing businessmen and so-called ‘fake journalists’ in cahoots with smugglers.

Leave no room to bend the rules. In fact, what had proven most effective in the past against sleaze at the ports was less the taking down of shady personalities, and more the setting up of impersonal systems and procedures to minimize, if not eliminate human intervention and discretion. Quite simply, if people have no choice but to follow

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Can anyone clean up customs?

the do’s and don’ts, there is little room to bend the rules for gain.

Customs” provides analysis on the risk management system at the BOC, as well as recommendations based on a review of best practices around the globe. The report focuses on two areas of risk management, particularly the Post-Entry Audit and the Super Green Lane.

That is what then Commissioner Guillermo Parayno did during his 1992-98 stint by computerizing customs processes. Thus, he brought down BOC corruption from one of the five worst in the government to a ranking below No. 30 among national agencies in the annual Social Weather Stations survey.

The program under the Philippine Tax Computerization Program (PTCP) entailed the adoption of the Automated System for Customs Data (ASYCUDA++) developed by the United Nations Conference on Trade and Development (UNCTAD) and implemented in cooperation with the Philippine Chamber of Commerce & Industry (PCCI).

Color-coding risk. Under the ASYCUDA Selectivity System, the BOC reduced the need for physical inspection — the source of much corruption — by classifying and channeling import entries to red, yellow, and green lanes, depending on risk assessment of importers. In addition, the BOC system including electronic filing of documents and payment of duties, again cutting out the sticky fingers of shady bureaucrats and their so-called haoshao minions.

The high-risk cargo, including those consigned to firms with suspect records, were marked red for physical inspection.

Medium-risk imports went under yellow for documents review. Low-risk companies like big-name manufacturers with sterling reputations took the green lane for speedy clearance and release without inspection.

The technical report “Risk Management Diagnostic Report: The Bureau of

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“Customs Reforms in the Philippines: Improving Efficiency, Effectiveness, and Anti-Corruption Outcomes” describes the Super Green Lane as a special clearance facility for accredited importers and post-entry audit as a safety net for trade facilitation systems since it allows the BOC to examine import transactions after the shipments have been released.

In “Reforming the Philippine Customs Service Through Electronic Governance”, Parayno discussed several IT interventions for paperless transactions. The Project Abstract Secure (PAS) enabled payments of duties and taxes by fund transfers through authorized banks. Through the Automated Customs Operating System (ACOS), importers digitized cargo declarations to be processed electronically, and the On-line Release System (OLRS) facilitated the final release of shipments. No paper, no payoffs.

The fruits of reform. In its article “The Role of Information Technology in Customs Modernization”, the Asian Development Bank summed up improvements brought by computerization: document signatures slashed to five from 79; cargo release time down to 4-6 hours for green lane and 48 hours for red and yellow, down from 6-8 days; and both shipment and payment papers digitized and electronically processed. Instead of total inspection, only 15% of red-lane imports had to be inspected, while 15% of yellow were subject

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Can anyone clean up customs?

to document review. Fully 70% of green lane goods went in without need for examination (see table below).

Before Computerization Required signatures Cargo release time

79 6-8 days

Shipments examined

All

Supporting documents required

Payment orders, official receipt, and proof of bank payments Anywhere in the port Many forms

Place of examination Accountable forms required Inward manifest documents submitted to bureau

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After Computerization 5 4 to 6 hours for green lane 48 hours for yellow and red lanes 15% physical examination (red) 15% document examination (yellow) 70% no examination (green) Payments are made to banks and electronically transmitted to Bureau of Customs by computer Designated examination areas Single Administrative Document (SAD) 3 copies in electronic format

In his article in the World Bank’s Customs Modernization Initiatives: Case Studies report Parayno cited the main success factors in BOC reform: strong Palace and Cabinet backing, private sector involvement and support, resolute BOC leadership, appropriate off-the-shelf customs software, and legislation that permitted selective inspections based on risk analysis.

But with the change in government in 1998, both Palace support and BOC leadership faltered, and sleaze returned to the bureau.

In a kind of postscript on the reforms, Parayno said in “Trade Facilitation and Customs Modernization: The Philippine Experience” that “efforts by the government to restart the process is proving more difficult than expected. In the meantime, facilitation and modernization is alive and well in the Philippines, albeit, driven not by the government this time but by the business community itself.”

A pound of cure. In the past decade, anticorruption reform has focused on catching

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crooks rather than eliminating opportunities to be crooked. These initiatives did not work as well as preventive reforms like ASYCUDA.

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The Revenue Integrity Protection Service (RIPS) is the anti-corruption arm of the Department of Finance. RIPS investigates allegations of corruption in the DOF and its attached agencies, including the BOC. In its website, private citizens can register and report incidents of corruption, as well as monitor the progress of those cases.

Further, anti-corruption programs of the BOC and BIR, namely the Run After The Smugglers (RATS) and Run After Tax Evaders (RATE), were also established.

Unfortunately, as the ADB’s “Philippines: Development Policy Support Program Cluster” reports, of the 180 cases filed with the Department of Justice (DOJ) under RATS and RATE, only a “few cases were successfully prosecuted“.

To improve revenue collection in both the BOC and the Bureau of Internal Revenue (BIR), the Lateral Attrition Act of 2005 or Republic Act 9335 was enacted. Through a system of rewards, incentives, and punishment, officials and employees of the two revenue bureaus are encouraged to exceed their revenue target. An ADB report “Process Map on the Criminal Prosecution of Tax Evasion in the Philippines”, however, points out that the Lateral Attrition Act focuses mainly on collection, and not so much on the criminal prosecution of tax evaders and their cohorts in the bureaus.

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Can anyone clean up customs?

Leadership — the key to reform. Of the essential elements of reform cited by Parayno, most important is leadership in the BOC itself. In an interview with CenSEI, Noemi Saludo and Julita Lopez of the industry group Port Users Confederation (PUC) stressed that in a faltering institution what is needed is a strong leader who knows the BOC like the back of his hand and can exercise political will and clout to drive reform.

Plainly, changing one of the most corrupt government agencies demands unflinching perseverance and, the audacity to face challenges head on without being swayed by pressures from within as well as outside, including elements within the administration.

In revitalizing customs automation and transparency, most crucial is the human factor. People with ulterior motives could find a way to circumvent the system. Hence, the BOC chief must also cultivate allies within the bureau and among upright stakeholders, to unmask and block schemes to undermine reforms.

And when there arise conflicts between a reformist commissioner and politically

connected officials, then the President must join the battle and use his considerable clout to stand by customs reforms even against his political allies.

Building blocks of change. Today, Commissioner Biazon again has all five building blocks of change, with the President’s mandate to raise revenues and slash sleaze, and full-fledged support from upright businesses keen to clean up Customs, if he would tap their decades of experience and sound advice. Shipment processing software has advanced even further in the past decade, and laws and rules remain in place for risk-based inspections. Plus the resolute leadership: Biazon himself.

International development agencies like the ADB, UNCTAD, the World Bank, the International Monetary Fund, among others, were suitably impressed by Parayno’s reforms to tap his expertise in advising authorities around the world on customs reform. Let’s hope Commissioner Biazon would also impress those global institutions and show the world that the Philippines is really following the Tuwid na Daan.

Speeding up trade

Besides boosting revenues and fighting graft, Customs Commissioner Rozzano Rufino “Ruffy” Biazon must also work with the private sector to speed up the flow of legitimate trade. Like the battle against graft, the drive for efficient, transparent and productive trade facilitation demands sustained efforts.

Back in February 2002, then-Finance Secretary Isidro Camacho volunteered the Philippines to be the pilot for a “replicable trade facilitation project through customs modernization” during the World Economic Forum (WEF) meeting in New York. In a speech entitled “A Developing Country’s View on Trade Facilitation” delivered by Deputy Commissioner Alexander Arevalo of the BOC during the International Forum on Trade Facilitation, trade facilitation has “taken a new meaning for the BOC” since stakeholders are demanding for the reduction of the time and cost of doing business with the BOC.

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Can anyone clean up customs?

One-stop shop. Arevalo also notes, “To streamline the revenue collection on imports, the BOC, consistent with the concept of a one-stop-shop, is mandated to collect all duties and taxes for imported goods, including those for the Bureau of Internal Revenue for value added tax (VAT) and excise tax and for the Land Transportation Office for ad valorem taxes for imported vehicles. It is at the BOC that inter- agency documentary and technical check[s] are done.”

In Doing Business 2011, a co-publication of The World Bank and the International Finance Corporation (IFC) that compares business regulation in different economies worldwide, the Philippines was ranked number 10 among countries who improved the most in trading across borders in 2009/10 mainly because of an electronic data interchange system.

The Bank adds: “Trade facilitation has become an important part of governments’ strategies to increase national competitiveness and diversify exports, often supported by multilateral organizations—including the World Trade Organization, the World Customs Organization and the World Bank—and bilateral donors.” Apart from boosting revenue collection for the government, trade facilitation also benefits businesses by making them more competitive and integrating them to global markets.

Shift to Transaction Value. The paper prepared for the World Development Report 2005 “Customs Valuation Reform in the Philippines” by University of the Philippines economics professor Ramon L. Clarete, notes that before the Philippine government adopted the WTO’s transaction valuation method in 2000 enabled

by Republic Act 9135 “the rules virtually allowed customs authorities to exercise a good amount of discretion” and that “[a]ccurate, reliable and timely information was costly to acquire and the rules failed to provide specific instructions when to use one valuation rule over another”.

Using the transaction valuation system, importers are legally entitled to “to use the price they actually paid or will pay for the goods they imported to the country in determining the duties and taxes due to the government”. Clarete summarizes, “This procedure helps to make businesses more predictable, erase the setting by which customs authorities exercise undue discretion and to accelerate the customs clearance of imported cargoes reducing transaction cost.”

Doing it the Kyoto way. Notably, while the Philippines was not part of the International Convention on the Simplification and Harmonization of Customs Procedures, also known as the Kyoto Convention, several BOC reforms followed major agreed provisions, according to the report “Philippine Compliance with the Revised Kyoto Convention”. The Revised Kyoto Convention is an update of the Kyoto Convention, taking into consideration best practices among its members, as well as global economic and technological changes that affect trade among nations.

In 2010, the Philippines formally submitted to the World Customs Organization its accession documents to the Revised Kyoto Convention. This obligates the country to adopt certain provisions, such as computerization, transparency, and minimal face-to-face contact with customs personnel.

A primer prepared by the Philippine Exporters Confederation, Inc. “The Revised Kyoto Convention for SMEs” discusses the benefits and costs of the country’s accession. Among them: • Harmonized customs procedures instead of dealing with 140 disparate national customs procedures

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Can anyone clean up customs?

• Reduced time and cost of clearing customs • Greater understanding of compliance requirements leading to increased transparency and predictability in customs transactions and elimination of discretionary treatment and application of rules and regulations • Implementation of special procedures for low-risk importers • Reduced opportunities for extortion of facilitation/grease payments.

Keeping trade fast and honest. But won’t faster procedures make things easier for smugglers? Not if risk assessment imposes stricter rules for suspect imports and importers. And if contraband does slip through, there is post-entry audit, courtesy of Executive Order 160 of 2003. BOC can inspect shipments even after they are released.

Of course, the post-entry auditors must do their job honestly and competently. One idea to help keep them on their toes and in line: ask the private sector to send observers to the audits, as it does to public bidding.

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Failure of an Institution: Office of the Ombudsman Will 100 good lawyers fix what’s wrong with the government’s anti-corruption agency?

By Verbo Bonilla problem -- a shortage of legal staff -- and is pursuing the sensible recourse. There may be a deeper problem than a shortage of lawyers, however, behind the continued ineffectiveness of the office she has inherited.

The new Ombudsman, Conchita CarpioMorales, is looking for a few good lawyers – more than 100 actually – to expedite the disposition of cases filed before her agency as well as cases already at the Sandiganbayan anti-graft court. A Philippine Star report provided some details of the attractive compensation packages.

The former Supreme Court justice is confronting head-on her office’s immediate

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Immense powers for the ‘protector of the people.’ The Office of the Ombudsman (OMB) is the single most important institution in the country’s fight against corruption. Called alternatively “watchman” and the “protector of the people,” it is bestowed with immense powers by the Constitution (Article XI) and the Ombudsman Act. It has primary jurisdiction over public sector corruption, and possesses investigatory, prosecutorial, adjudicatory and punitive powers. It has the power to recommend and even enforce sanctions on any erring government worker,

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Failure of an institution: Office of the Ombudsman

direct officials to surrender documents, issue subpoenas, and punish for contempt.

In the 2006 National Integrity System Assessment, Country Study Report

by Transparency International, the Ombudsman was cited as “the country’s premiere anti-corruption body, lead government agency and primary integrity institution responsible for curbing graft and corruption.” According to the report, “compared to anti-corruption agencies in other countries, the Philippine OMB is one of the most powerful.”

Failure to make a dent in public corruption. For all its power, however, the Office of the Ombudsman (OMB) doesn’t seem to have made a dent in corruption over the last 22 years. A Philippine Center for Investigative Journalism (PCIJ) article “4 Ombudsmen, 4 Failed Crusades vs Corruption,” the last in a four-part series on the Ombudsman, assessed the performances of Carpio-Morales’ four predecessors, and found them dismal on various measures: case conviction by number of respondents, disposal of cases

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against top elective and non-elective officials, and case survival record.

For instance, the PCIJ found that CarpioMorales’ predecessor, Merceditas Gutierrez, secured 223 case convictions during her term, for a conviction rate of 5.48% of cases filed during her term, compared to 3.96% of cases filed by Simeon Marcelo, 3.19% of cases filed by Aniano Desierto, and 4.38% of cases filed by Conrado Vasquez. (A further look at Gutierrez’ conviction rate also shows that of the 223 cases she filed, 221 of them were against one official, the mayor of Nakar in Quezon province.)

The office’s mimimal success in punishing official corruption has also done little to improve public perception of corruption in the Philippines. A plot of the Philippines’ scores in Transparency International’s corruption perception index from 19952010 shows the country perennially stuck near the bottom of the scale. The index is based on various assessments and business opinion surveys conducted by independent institutions. (see chart below)

PH Corruption Perception Index (1995-2010)

!

4 3.5

3.6 3.3

3 2.5

3.05 2.77

2.8 2.9

2.69

2.6

2.5

2.6

2.5 2.5 2.5

2

2.3

2.4 2.4

1.5 1

CPI Scores

0.5 0 1994

1996

1998

2000

2002

2004

2006

2008

2010

Philippine corruption perception index scores through the years, with 10 representing perception of being the least corrupt, and 0 representing perception of being the most corrupt. While each index number represents a perception of corruption in a given year, and thus, is not necessarily connected to index numbers in other years, the chart does show consistently poor scores for the country.

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Failure of an institution: Office of the Ombudsman

Two separate studies, Graft and Corruption: The Philippine Experience, which was presented at a United Nations Public Administration Network training seminar, and Combating Corruption in the Philippines, which was commissioned by the World Bank, cite the problem of widespread corruption in the country. That the studies were done in 2000 underscores the persistence of the problem, as well as continuing international concern. Surveys and studies abound on the subject, and citing them all here would only belabor the point.

Of course, there are other institutions involved and responsible for fighting graft

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and corruption in the Philippines, which, after all, has been a historical problem.

The 2006 National Integrity System Assessment cited above exhaustively listed them all, including related laws. Persistent corruption may also be viewed as a failure of the executive, as every president in the country’s history had their own anticorruption program.

However, with its specific mandate as lead anti-corruption agency, the Ombudsman has the wherewithal to coordinate all other institutions. Mandated to act as an independent body, the Office of the Ombudsman must own the bulk of the blame for failing to stop corruption in the country.

Philippine Anti-Graft and Corruption Laws, by NIS Pillar Pillar Executive Legislature Political Parties Comelec COA Judiciary/ Sandiganbayan Civil Service Commission Police Procurement Ombudsman Anti-Corruption Agencies Media Civil Society Business Sector/ SEC Regional and Local Government International Institutions

Law Constitutional Law Constitutional Law No Law Omnibus Election Code of the Philippines of 1985 or Batas Pambansa Bilang 881 Syncronised National and Local Election Act of 1991 Constitutional Law Constitutional Law Ant Act Further Defining the Jursdiction of the Sandiganbayan An Act To Strengthen the Functional and Structural Organisation of the Sandiganbayan Constitutional Law Philippine National Police Reform and Reorganisation Act of 2002 Government Reform Act of 2002 The Ombudsman Act of 1989 EO, PD and other measures Creating the Movie and Television Review and Classification Board 1985 No Law The Securitisation Act of 2004 The Bank Act of 1993 Constitutional Law The Government Code of the Philippines of 1991 International Agreements

Number Art VII Art VI Art IX C RA 7166 Art IX-D Art VIII RA 8249 RA 7975 Art IX-B

RA 9184 RA 6770

PD 1986 RA 9267 RA 7653 Art X RA 7160

Related laws and other institutions involved in fighting graft and corruption in the Philippines.

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Failure of an institution: Office of the Ombudsman

Institutional weakness of the Ombudsman? Chronicling such consistent underperformance by the Ombudsman, the PCIJ article begs the question: Is something wrong with the institution itself? A January 2009 paper by the Transparency and Accountability Network (TAN) entitled, “The Office of the Ombudsman: Is There Institutional Weakness?” attempted to answer the question.

whose office many of the local counterpart’s characteristics were derived.

The paper ended on an optimistic note, nonetheless, saying that “from a strictly theoretical point of view, the Ombudsman Act satisfies the requirements of a successful Ombudsman institution.”

Two decades hence, however, the Ombudsman has shown little more than continuing underperformance.

Even worse, the previous Ombudsman resigned under threat of impeachment.

What seems emerging from all these is that the Ombudsman as an institution in the Philippines has been largely a failure.

What accounts then for this failure of the Ombudsman to live up to its vast potential?

The paper noted the ability of the institution to deliver better performance, but that it had been weighed down by “poor leadership.” Since the article merely compared institutional changes during the terms of the two most recent Ombudsmen at the time – the incumbent Gutierrez and her predecessor Marcelo – whatever answer there was to the question was not necessarily generalizable.

An older paper, by former University of the Philippines law dean Salvador Carlota, posed a more fundamental question: Is the Ombudsman institution workable in the Philippines? The 1990 paper entitled, “The Ombudsman: Its Effectivity and Visibility Amidst Bureaucratic Abuse and Irregularity” asked the question as early as a year into the establishment of the Office of the Ombudsman.

Even then, the paper noted that, in the 10 years of its existence, the Tanodbayan, the precursor of the Ombudsman, “has not convincingly demonstrated its capability to fully or effectively perform its constitutional role as the ‘Protector of the People.’” The paper then compared the local Tanodbayan/Ombudsman office and context with Sweden’s Ombudsman, from

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Reasons why Ombudsmen have failed. In its defense, the office under then-Ombudsman Gutierrez responded to the PCIJ series by citing, among others, the perennial problem of the institution with funding, as well as in hiring and retaining lawyers. Since the office is covered by the government standard pay scale, the response went, lawyers are instead “lured by the tempting offers of some private and public corporations.”

Tony Kwok, the former head of Hong Kong’s Independent Commission on AntiCorruption (ICAC), disagrees that the vast powers under the Ombudsman are enough to handle what it’s up against. In a forum covered by Newsbreak magazine, Kwok deplored that our Ombudsman “cannot arrest” and “cannot wiretap calls.” He recommended more powers and a bigger budget for the institution, perhaps with the thought of molding the Ombudsman after the ICAC model.

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Failure of an institution: Office of the Ombudsman

A paper by Kwok entitled National Anti-Corruption Strategy: The Role of Government Ministries listed reasons why anti-corruption agencies like the Ombudsman fail, even while proposing the “effective anti-corruption strategy.” The reasons he proposed are many and varied:

as grants from multilateral donor agencies, as cited by “Ombudsman A Failure Despite Flood of Funds,” one of the articles in the PCIJ four-part series on the Ombudsman.

1. Lack of resources; 2. Lack of professional staff; 3. Lack of independence; 4. Wrong strategy; 5. Inadequate law and jurisdiction; 6. Lack of public credibility and support; 7. Lack of coalition; 8. Corrupt judiciary; 9. Lack of public accountability and internal control, and; 10. Lack of political will.

Tempting as it might be to just lump everything together under ”all of the above,” that might not provide much in terms of insight or guidance for our current ombudsman. Let’s go through each reason then, and try to pinpoint which ones might be relevant to the present discussion.

Counting the ways. First, has the Ombudsman failed because of lack of resources? Certainly, this should at least account for part of the failure. The above response to the PCIJ articles, for instance, referred to a P2.1-billion budget proposal of the office in 2010, of which only P1.06 billion has been approved. This year, the budget appropriated for the Ombudsman is P1.03 billion. According to Kwok, the ideal funding for the Ombudsman is 0.3 percent of the national budget, which should amount to at least P4.9 billion of this year’s total appropriations . Still, it should be noted that there are other sources of funding available to the Ombudsman, such

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Second, with regard to the lack of professional staff, according to its 2009 annual report, the Office of the Ombudsman receives an average of 13,000 complaints annually. Based on its latest staffing summary , the office has a filled complement of 1,115 staff; and, if the manpower composition has not changed much from 2009, then only about 30%, or 340, of these staff are lawyers.

According to a report in BusinessWorld, each lawyer is assigned at least 90 cases a year. With an average 6.6 years it takes the Sandiganbayan anti-graft court to resolve a case, according to the PCIJ “4 Ombudsmen” article, the combination of newly filed cases and unresolved cases means a backlog -and a clear shortage of lawyers -- to handle the office’s immense caseload.

Third, the lack of independence of the Ombudsman may not be readily apparent, particularly if its constitutional mandate is to be the sole reference. However, in his forum, Kwok lamented the popular observation that the Ombudsman “is sometimes used as a political tool” and cited its slow action on cases involving “big fish.”

The PCIJ report also reported that “not one of the four Ombudsmen was (and is) fully and freely unencumbered by a prior history of closeness to the president who had appointed him or her.” It detailed cases where Desierto, Marcelo and Gutierrez, at least, allegedly favored the Presidents who appointed them.

Fourth, with regard to its anti-corruption strategy, the Ombudsman has an 8-Point

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Comprehensive National Anti-Corruption Strategy, which consists of both punitive and preventive anti-corruption measures.

It also has a detailed primer on its graft prevention programs. But each Ombudsman at the helm would, of course, implement these formulaic strategies differently.

TAN’s paper above on institutional weakness, for instance, criticized the centralization of most decision-making in Gutierrez’ office, in contrast to Marcelo’s emphasis on decentralization. It cited as well Gutierrez’ failure to involve other partner organizations in the fight against corruption, whereas Marcelo was quite active in this effort.

Fifth, regarding inadequate law and jurisdiction, the debate remains whether the immense powers at the Ombudsman’s disposal are insufficient. Does it need the additional powers to wiretap calls and issue arrest warrants, as Kwok suggests?

The above study “Graft and Corruption: The Philippine Experience” categorically answers “the Philippines does not need any more laws against corruption… what it needs is a re-examination of anticorruption laws.” In evaluating the Philippines’ National Integrity System, the country report above also concludes that the Philippines’ “anti-corruption laws are comprehensive, and tight regulatory frameworks exist,” but that “the NIS pillars themselves have become compromised.”

Sixth, with regard lack of public credibility and support, achieving this prospect is something entirely up to any sitting Ombudsman. There should be no reason why the institution, as envisioned in its enabling laws, would have poor credibility and support at the outset. What happened to Ombudsman Gutierrez, whose removal

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received strong public clamor, ought not happen to a better performing Ombudsman.

Seventh, as lead anti-corruption agency, there should also be no reason why the Ombudsman should have a “lack of coalition.” Indeed, the Ombudsman lists “linkages with other government institutions and international corruption fighters” as part of its eight-point strategy.

The stratagem calls for the formation of an Inter-Agency Coordinating Council among the Commission on Audit, the Civil Service Commission, the Department of Justice, the National Bureau of Investigation, the Presidential Commission Against Graft and Corruption, as well as partnerships with several local and international organizations.

Eighth, whether the Philippine judiciary is corrupt is a contentious issue, but public perception cannot be ignored. However, in the Study of the Judiciary and the Legal Profession, a survey by the Social Weather Station (SWS), fully one-fourth of lawyers polled said “many/very many judges are corrupt.” A survey on Asian judicial systems by the Political and Economic Risk Consultancy (PERC) ranked the Philippines 6th (grade of 6.10 on a 0-10 scale, with 0 being the best and 10 being the worst) among judicial systems. PERC stated that “despite India and the Philippines being democracies, expatriates did not look favourably on their judicial systems because of corruption.” Another study titled “Strengthening Judiciary Integrity Against Corruption in the Philippines” cited a World Bank survey that found 62 per cent of Philippine respondents believed significant levels of corruption happen within the judiciary and 57 per cent that many or most of the judges could be bribed.

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Ninth, in terms of lack of public accountability and internal control, the National Integrity System Assessment above noted “horse-trading” between Philippine legislators and the executive to place their people in positions of influence as well as “systematic state capture of government” by both political and business elites. Further, it found that “The principle of separation of power and the check-and-balance mechanism – crucial elements in the prevention of collusion within oversight departments – have been ignored… Accountability agencies imbued with constitutional independence and fiscal autonomy lack true independence due to inadequate financial resources and budget shortfalls.”

Last, Kwok says political will is “the most important element of an effective anticorruption strategy.” A Stanford University paper titled “Curbing Asian Corruption: An Impossible Dream?” adjudged the Philippines having consistently demonstrated weak political will to combat corruption for the past 50 years. It cited traits and cultural values which have made Filipinos more tolerant of corruption. It attributes to weak political will the reason why corruption has already become institutionalized in the Philippines.

By our count, it appears that at least seven of the reasons detailed by Kwok apply to our Ombudsman. So what lessons can and should the new Ombudsman derive from all this?

The power to make a difference. A conclusion that we can make is that the Ombudsman has sufficiently vast powers to make a difference in the national anticorruption efforts. However, there are also considerable obstacles for the institution

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to overcome. These obstacles present themselves in insufficient funding, political influence, a corrupt judiciary, lack of a working accountability framework and deficient political will.

But, because of its immense powers, it is also within the capacity of the Ombudsman to overcome these roadblocks. For instance, it can, and must, widen the anti-corruption coalition of government agencies and other organizations. With many donor organizations keen on good governance and anti-corruption, the Ombudsman is not limited to government funding.

There are many other recourse available to the Ombudsman to improve its performance. It has been observed, for example, that the Ombudsman through the years may have focused much on prosecution, and neglected its preventive functions. Carlota’s paper above, for instance, suggested the use of more admonition, such as that being used by the Ombudsman’s Swedish counterpart.

Carpio-Morales is off to a good start. Her resolve to correct the shortage of legal hands will definitely help improve the office’s ability to dispose of cases and raise its dismal conviction rate. Apparently, there is still the budget recourse to bolster the ranks of the institution’s professional staff. Her initial plans, as divulged in her interview before the Judicial and Bar Council, to conduct an inventory of cases with the OMB and conduct trainings of employees and assessments of their performance are also promising. It shows that Carpio-Morales is committed to raising the efficiency and effectiveness of her office, particularly in the handling and disposing of corruption cases.

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Most importantly, however, Ombudsman Carpio-Morales must exhibit throughout her term an independence of mind and strength of will not to be used as a “political tool” by the appointive power. As Kwok pointed out, political will is the most important element of any anti-corruption strategy. In this case, the Ombudsman, as an independent institution, must seize for itself the political will to pursue its anticorruption agenda.

In the JBC interview, Carpio Morales vowed, “You can count on my independence.” This is certainly good to hear. Political pressure, however, is expected to be brought to bear, especially with high-profile and highly politicized cases pending with her office. In the face of this pressure, Carpio-Morales’ resolve will be tested. Only the next few years will show whether Carpio-Morales have succeeded where her predecessors have failed.

High-profile cases to test the Ombudsman’s mettle and resolve Conchita Carpio-Morales herself said, in the ABS-CBN news transcript of her interview for the Ombudsman position, that “the work of a Supreme Court justice is much more difficult than the work of the Ombudsman.” Let’s take her word for it now, but remind ourselves to check back with her after a year or so.

Degree of difficulty aside, the more important concern for many will be how she handles cases that had been particularly thorny for her predecessor, Merceditas Gutierrez, so thorny, in fact, that the failure to dispose of them properly became the subject of the impeachment complaint against Gutierrez.

These cases are: • The NBN-ZTE deal, referring to the failed deal for Chinese telecoms firm ZTE to build a national broadband network for the government; • The Fertilizer Fund Scam, involving accusations that hundreds of millions of pesos in fertilizer funds from the Department of Agriculture were diverted for use in the 2004 elections; • the Euro Generals Scandal, concerning the discovery of undeclared huge sums of money with several Philippine National Police officials; • The suspected murder of Ensign Philip Pestano aboard a Navy ship said to have been transporting illegal cargo, and; • The AFP_Fund_Controversy, about the alleged malversation of funds in the Armed Forces of the Philippines.

Meanwhile, the NBN-ZTE deal and the Fertilizer Fund Scam, along with four other cases – the alleged anomalous sale of the old Iloilo airport for P1.2 billion to Megaworld Corp. in 2007; the alleged misuse of more than P550 million from the Overseas Workers’ Welfare Administration, and; two cases involving the alleged misuse of at least P325 million in intelligence funds of the Philippine Charity Sweepstakes Office – comprise the six plunder cases that have thus far been filed against former President Gloria MacapagalArroyo among others, and that the new Ombudsman is expected to be on top of.

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The World’s Last Divorce Debate

Does the Philippines need a divorce law?

By Maria Carmina Olivar With Malta’s divorce law enacted in July, the Philippines is now having the world’s last legislative debate on divorce. So far, the recent renewed push to legalize divorce is not as controversial as the Reproductive Health (RH) Bill — at least not yet. But with our nation being the last one without divorce, the Catholic Church and other opponents of laws dissolving marriage are making their final stand in Congress.

House Bill No. 1799, or “An Act Introducing Divorce in the Philippines,” was filed by Rep. Liza Maza of Gabriela in 2005, then re-filed in August last year by Luzviminda Ilagan and Emerenciana De Jesus, also for the women’s party-list group. It would amend the Family Code of the Philippines, decreed in 1987 by then-President Corazon Aquino, when she temporarily wielded legislative powers.

House committee hearings on HB 1799 begun in June drew immediate protest

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from the Catholic Bishops Conference of the Philippines. Former CBCP president and retired Lingayen-Dagupan Archbishop Oscar Cruz had warned that passing the RH Bill could open the gates to more contentious legislation, such as divorce and same-sex marriages.

Back on the front burner. Now, divorce is back on the front burner. CBCP legal counsel Jo Imbong cited passages from the Constitution to argue that the very idea of divorce violates Philippine law. Opponents also maintain that legal separation and annulment already allowed by the Family Code, address the problem of unhappy and failed marriages.

But divorce advocates insist those two remedies are not enough. The grounds for annulment focus on events at the time of the wedding, rather than the marriage itself. Legal separation, on the other hand, while allowing couples to live apart, does

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not actually put an end to the marriage.

In effect, it maintains a marital status that clearly no longer reflects the relationship between former spouses.

The Catholic Church still objects to HB 3952, however.

The current Divorce Bill would terminate marriage, not just separate couples or declare that a marriage was null and void from the start, which seems to many as a kind of legalized fiction. The measure would also eliminate “condonation of/consent to the act” of marital abuse as grounds for denying petitions for separation or divorce.

The Divorce Bill would also better address financial issues through equal division of conjugal assets and spousal support for former partners who are not gainfully employed.

Other bills offer similar solutions.

Early this year Bayan Muna Representative Neri Colmenares filed HB 3952, or “An Act Recognizing Spousal Violence, Infidelity and Abandonment as Presumptive Psychological Incapacity Constituting a Ground for the Annulment of Marriage.”

Instead of instituting divorce, Colmenares wants to expand the grounds for annulment.

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A year before Rep. Colmenares filed HB 3952, another women’s party-list group, 1-Ako Babaeng Astig Aasenso (1-ABAA), urged a 10-year limit on a marriage contract’s validity, with an option for renewal, as has been proposed in the U.S. Though 1-ABAA initially reported positive reactions to their proposal, the Church held its ground and opposed it, and the idea did not gain much traction after the initial media coverage.

Trying to make a comeback since 1999. The divorce law has been trying to make a comeback here in the Philippines for more than a decade now. In 1999, Representative Manuel Ortega filed HB 6993. Two years later Senator Rodolfo Biazon championed Senate Bill No. 782, while Representative Bellaflor AngaraCastillo filed House Bill No. 878. All three were entitled, “An Act Legalizing Divorce, Amending for the Purpose Title II and Articles 55 to 67 Thereunder of Executive Order No. 209, as Amended by Executive Order No. 227, Otherwise Known as the Family Code of the Philippines.”

Will the new divorce bills filed by Gabriela finally gain traction? Both have the local women’s rights groups all up in arms and ready to defend their stance. The issue has half of the public backing it, according to an SWS survey earlier this year. But with the RH Bill having stirred the Catholic Church into political action, opponents of divorce are also primed for a big fight. And not just the Philippine hierarchy. Vatican envoy Archbishop Giuseppe Pinto declared that being the only nation with no divorce law was “a point of honor” for the country.

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When the Philippines allowed divorce In fact, there used to be a divorce law in the country, enacted and expanded under non-Catholic foreign rule. Deogracias T. Reyes’s “History of Divorce Legislation in the Philippines since 1900” cites Act No. 2710, or the Divorce Law, allowing absolute divorce, or divorce a vinculo matrimonii, which was passed on March 11, 1917. It set strict grounds: criminal conviction for adultery or concubinage. Then, under Japanese occupation, the law was relaxed. On March 25, 1943, Executive Order No. 141 repealed Act No. 2710 and permitted absolute divorce on 11 grounds.

Divorce itself was repealed on June 18, 1949, by Republic Act 386. The Civil Code of the Philippines made divorce illegal, except under an accompanying measure, RA 394, enacted the same month. The latter allowed absolute divorce for Muslims in non-Christian provinces.

In 1977 then-President Ferdinand Marcos included Muslim divorce in Presidential Decree No. 1083, or “A Decree to Ordain and Promulgate A Code Recognizing the System of Filipino Muslim Laws, Codifying Muslim Personal Laws, and Providing for its Administration and for Other Purposes.” Aside from Muslims, foreign spouses of Filipinos were also allowed to divorce under an amendment to the Family Code, allowing their Filipino exes to remarry.

So is divorce the answer to the challenge of marital woes? So is divorce the answer to the challenge of marital woes?

Highly Westernized societies like ours tend to look to America in search for guidance, or at least a reference point on weighty issues.

Hence, it may be worthwhile to see how the United States has handled the matter of divorce through the years, and what social impact it made on American family life.

In almost half of all U.S. marriages, at least one partner is remarrying, and an estimated two out of every five marriages in the nation end in divorce. According to U.S. census data, a first marriage that ends in divorce lasts an average of about eight years, with a median time between divorce and remarriage estimated at about three and a half years.

These numbers have fascinated doctors, specialists and scholars and continue to fuel reports and papers on social and economic issues that may or may not influence marriage trends. In fact, the National Center for Health Statistics released a comprehensive report on socioeconomic

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factors and how they affect cohabitation, marriage, divorce and remarriage in the U.S. Notably, the data point to factors that lead to marital dissatisfaction and divorce, from early marriage and lower level of education, to premarital sex and cohabitation, psychological problems, and the availability of alternative partners. Efforts to address those root causes need to be undertaken along with, or, some would argue, instead of divorce legislation.

According to Betsey Stevenson and Justin Wolfers’ study, “Marriage and Divorce in the United States,” the divorce rate peaked in 1981 and is now slowly declining, partly due to the decline in people getting married in the U.S. over the past 25 years. A research brief prepared by Prof. Douglas Allen and Maggie Gallagher for the Institute for Marriage and Public Policy in 2007 concludes that no-fault divorce did play a part in increasing the U.S. divorce rate. All U.S. states allow no-fault divorce, in which no wrongdoing or deficiency by either couple is needed to dissolve the marriage. The Philippine divorce bill does not include no-fault divorce.

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Divorce in the wellspring of Catholicism Turning to Europe, we see a variety of family and divorce laws, as explained in the compilation, “Civil Law Cultures in Europe: Some striking (dis)similarities”. Still, there are notable parallels in the divorce legislation of the predominantly Catholic nations of Ireland, Italy and Spain, which enacted them later than North America, between 1974 and 1997.

Their statues have provisions like those in House Bill 1799, including stricter conditions and processes, reflecting strong Roman Catholic influence. For instance, like a similar provision in the Philippine bill, Ireland’s Divorce Act, passed in 1997, requires that spouses have lived apart for at least four of the previous five years, as explained by.

House Bill 1799 sets five requirements for divorce: de facto separation of at least five years, legal separation of at least two years, valid grounds for legal separation causing the irreparable breakdown of the marriage, psychological incapacity or irreconcilable differences resulting in irreversible marital breakdown.

Similar provisions apply in Ireland, Italy and Spain: a continuous three years of separation for the former, and two years for Spain. Plus: no provision for no-fault divorce in the two countries and Ireland. Such provisions may partly explain why those nations have not experienced the high divorce rates seen in America and elsewhere. Indeed, the three nations have seen generally long-lasting marriages, compared to the U.S. Philippine divorce proponents argue that the same would happen here if divorce is allowed.

In 2006, Ireland’s Iona Institute for Religion and Society released a report on the breakdown of marriage and family structure, using figures going back 20 years. The analysis showed increasing rates of marital breakdown, including divorce, starting in 1997, as well as single parents and co-habitation. However, as late as 2009, Ireland still held the least divorces as a percentage of all marriages.

Divorce has been allowed in Italy since 1974; and in Spain since 1981. Nevertheless, the Organization for Economic Co-operation and Development (OECD), which groups developed countries, found that Italy’s divorce rate is very close to Ireland’s. And while Spain’s divorce rate is about double Italy’s, the average duration of marriages for both countries is about 15 years.

A research article by Fabrizio Bernardi and Juan-Ignacio Martinez-Pastor explores the divorce factors in Spain, which may explain its higher divorce rate despite having enacted a divorce law more than five years after Italy. The study indicated that economic and education factors have less impact on divorce rates for Spanish women since divorce was legalized in 1981. But having children led wives married in the 1980s to stay hitched. And as in several other countries, co-habitation before marriage was a factor in later divorce.

Again, the research points to factors that could be addressed by measures along with or other than divorce legislation.

The importance of providing spousal and child support. What about the impact of divorce on families, especially on wives and children? One of the highlighted benefits of the Divorce Bill – and one main reason why women’s rights groups champion it – is spousal and child support. Dee Dicen

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Hunt and Cora Sta. Ana-Gatbonton observe: “Filipino women accept that part of their role in marriage is to satisfy the sexual needs of their husband, whether they like it or not … Abuse and violence is often accepted as part of married life.” With financial support assured, more battered wives with no paid

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employment would likely seek divorce as a way out of abusive relationships.

Other studies look at the impact on children after divorce. “The Long Term Effects of Legalizing Divorce on Children,” a study by Professors Libertad González of Barcelona’s Universitat Pompeu Fabra and Tarja Viitanen of the University of Sheffield, cites studies showing both negative as well as minimal impact of divorce on children in their adult life.

The 2008 study, supported by Germany’s Institute for the Study of Labor (IZA), summed up: “We find consistent evidence suggesting that the legalization of divorce had negative long-term effects on children, particularly females. Women who grew up after divorce was legalized earn significantly lower wages and have lower incomes compared with women growing up under illegal divorce. They also report significantly more health problems. These negative effects are not found for men.”

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With much to learn about the lifetime impact of family breakup, Profs. Gonzalez and Barcelona urged more research into the effects of divorce: “Knowledge of the potential long-term impact of these reforms on children should inform the discussion and potentially help prevent some of the detrimental effects.”

So is divorce the answer to the challenge of marital woes? It certainly provides one solution. Since House Bill 1799 is similar, if not stricter, than divorce laws in three Catholic countries with low divorce rates, there seems less reason to fear a surge of marital break-ups after legalization.

Moreover, given the sad and stark options facing battered wives, passing a divorce law will be an enlightened response to the longstanding oppression suffered by women in silence while men act as they wish by just because they win the bread. Letting the abuse continue would certainly be not only unjust, but also un-Christian.

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business

Welcome, World, Please Fly In Will open skies bring in more tourists?

By Joanne Angela B. Marzan Table 1: 2010 Tourist Arrivals in ASEAN Countries

The Philippines boasts of 7,107 islands that host their share of beautiful and breathtaking wonders.

POINT & CLICK You can access online research via your Internet connection by clicking phrases in blue letters

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And yet, data coming from the Department of Tourism shows that in 2010, only 3.5 million international tourists have set foot on Philippine shores, a dismal figure compared with the figures forthe rest of Southeast Asia. 11.6 million tourists visited Singapore, a small island country equivalent to the land area of Metro Manila. Vietnam is poised to become the next frontier in Asian tourism.

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NUMBER OF TOURIST ARRIVALS (2010)

1. Malaysia 2.Thailand 3. Singapore 4. Indonesia 5. Vietnam 6. Philippines 7. Laos 8. Cambodia 9. Myanmar 10. Brunei

24.6 million 15.8 million 11.6 million 7 million 5 million 3.5 million 2.51 million 2.5 million 311,000 200,000*

*based on Brunei Tourism Source: Staff compilation of data from individual countries’ tourism websites, except where indicated.

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Data from January-June 2011 shows an increase of over 300,000 visitor arrivals year on year, bringing the midyear total to 1.91 million visitors.

Visitor Arrivals to the Philippines January to June 2011 - 2010

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250000 200000 150000 100000 50000 0

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Source: http://www.tourism.gov.ph/Pages/IndustryPerformance.aspx

But these numbers may no longer be enough.

The government is tired of being one of Asia’s tourism laggards and is hell-bent on implementing a liberalized international aviation policy, other wise known as Open Sky. Executive Orders 28 and 29 Moving to improve our competitiveness in tourism in Asia, President Benigno S. Aquino March 14, 2011, signed Executive Order No. 29: Authorizing the Civil Aeronautics Board and the Philippine Air Panels to pursue more aggressively the International Civil Aviation Liberalization Policy “to boost the country’s competitiveness as a tourism destination and investment locationand enhance the competitiveness of Philippine domestic carriers.” E.O. 29 authorized the creation of Philippine Air Negotiating Panels and/or the Philippine Air Consultation Panels to negotiate Air Service Agreements with the airlines of other countries under a newly-adopted Open Sky policy.

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Executive Order 28, which was signed on the same day, reorganized the Philippine Air Negotiating Panel and the Philippine Air Consultation Panel.

Features of an Open Sky policy.

The important features of an open skies agreement are as follows:

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• Does not provide a limitation on the number of airlines that is designated by countries; • Provides unrestricted capacity and frequencies on all routes; • Provides full third/fourth-freedom, fifth-freedom and sixth-freedom rights, unlimited change of gauge, co-terminalization, substantial routing flexibility, and seventh-freedom cargo rights; • Provides a double-disapproval pricing provision on all routes; • Provides liberal charter arrangements; • Opens code-sharing opportunities; • Provides intermodal rights; • Provides pro-competitive doing- business provisions; • Provides commercial opportunities, currency conversion/remittance, ground handling, and user charges, and; • Provides model provisions on safety and security.

‘Pocket’ open sky policy. In Section 3 of E0 29, “the Philippine Air Panels may offer and promote third, fourth, and fifth freedom rights to the country’s airports other than the Ninoy Aquino International Airport (NAIA) without restriction as to frequency, capacity, type of aircraft, and other arrangements that will serve the national interest as may be determined by the CAB (Civil Aeronautics Board).” NAIA was excluded since it has already reached

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about 95% of its capacity. The Philippine Air Panels are tasked to identify which secondary airports will be part of this “pocket” open sky policy.

2,600 positions from its non-core units by the end of this year.

A total of nine international commercial aviation agreements, or Freedoms of the Air, were formulated during the Convention on International Civil Aviation of 1944 (known as the Chicago Convention). In the Manual on the Regulation of International Air Transport, a third freedom right is defined as the right of an airline to fly from the airline’s country to another. A fourth freedom right is the right of an airline to fly from another country to one’s own. A fifth freedom right is the right of an airline to fly between two foreign countries during flights, provided that the flight originates or ends in one’s own country.

Boeing, the leading U.S. manufacturer of commercial jetliners and defense, space and security systems, provides an illustrated explanation of the nine Freedoms of the Air. Not the first time. This is not the first time that the government has tried to implement an Open Skies Policy. In 1995, President Fidel V. Ramos signed EO 219 to “liberalize domestic and international civil aviation policy to encourage the entry into the Philippines of more domestic and international players providing air services.”

The most important effect of EO 219 was that it allowed the entry of new players into the aviation industry, an industry that was once monopolized by Philippine Airlines (PAL), the country’s national carrier. PAL brings in most of the international tourists.

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A Policy Note from the Philippine Institute for Development Studies (PIDS) in 2001 considered President Ramos’ EO 219 an important policy, and suggested that it be fully implemented immediately. In its analysis, the PIDS note said that while EO 219 allowed new domestic air carriers, it failed to designate at least two airlines as official international carriers of the country. The policy note added that since no Implementing Rules and Regulations were formulated, the negotiations for air service agreements did not reflect change in policy.

It cited as an example the aviation dispute between the Philippines and Taiwan in 1999.

In 2006, President Gloria MacapagalArroyo signed EO 500-A, which “provided for the grant of unlimited third and fourth freedom rights to foreign air carriers operating in the Diosdado Macapagal International Airport (DMIA) and the Subic Bay International Airport (SBIA), subject to evaluation by the Civil Aeronautics Board (CAB), taking into consideration its impact on the Philippine carriers and the domestic civil aviation industry.”

Business, aviation sector reaction.

In its April 1, 2011 statement, the Makati Business Club commended President Benigno S. Aquino III and his entire economic team, for issuing Executive Order 29. “This policy development is a milestone for the Aquino administration, signifying the government’s determined commitment to attain sustainable and inclusive growth for the country. Recognizing the impact of EO 29 in achieving the economic vision of the Administration, we fully support

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this aggressive stance on liberalizing civil aviation.”

For his part, PAL president and chief operating officer Jaime J. Bautista said in a statement to ABS-CBN, “We welcome the President’s vision to promote a competitive international aviation sector anchored on ‘a strong Philippine-based aviation industry,’ which we firmly believe is indispensable to the development of Philippine tourism, trade and economic progress.”

Cebu Pacific, now the leading carrier in the domestic market, said in a statement that it “supports free and fair competition.”Cebu Pacific CEO Lance Gokongwei discussed Open Sky in his interview with the ABSCBN News Channel (ANC).

Southeast Asian Airlines (SEAir), the country’s premiere leisure airline, also

did not pose any objections to EO 29. In a report in the Philippine Daily Inquirer, SEAir president Avelino Zapanta said that allowing foreign carriers to fly in our domestic airports would spur the growth of the aviation industry. For his part, Zest Airways chairman Alfred Yao stated, “We welcome additional competition because it will grow the market for all airlines. But we should put everything on equal footing with foreign airlines.”

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Reciprocity not mentioned.

The reciprocity that the domestic airlines are seeking, however, is an issue on which EO 29 is silent. In the Implementing Rules and Regulations (IRR) approved by the Civil Aviation Board in May 2011, reciprocity between local and foreign carriers was not mentioned.

The main contention is that while the foreign airlines shall be given unlimited access to the country’s domestic airports, the local airlines have yet to be given reciprocal rights in the foreign airlines’ home countries.

“PAL is not against open skies. We just want it to be fair and reciprocal, and its implementation should be phased-in and calibrated,” PAL president and COO Jaime Bautista said in a statement to GMA-7.

Similarly, Cebu Pacific said, “We strongly believe that the Philippine airspace is a valuable asset and should be used to further the long-term interest of the nation through mutually beneficial air agreements.” Cebu Pacific also provided examples of the limited flights they now experience with Hong Kong, China, Korea, Singapore, and Malaysia.

Heeding the call of the US and ASEAN? The Aquino administration may have adopted the Open Sky policy based on the experiences of other countries that have done so, and as part of the ASEAN agreements calling for the integration and liberalization of air transport in the region.

The US government is a strong advocate of Open Skies Policy, with over 100 partners from all over the world. In March 2011, in celebrating 100 Open Skies partners,

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Secretary of State Hillary R. Clinton said that “an Open Skies agreement has powerful benefits – fewer government restrictions, more competition, more jobs in the air and on the ground; more people trading, exchanging and interacting; cheaper flights, more tourists, new routes to new cities.“ A 2006 study from InterVistas, a leading U.S. consultancy firm composed of

transport and tourism experts, supported Sec. Clinton’s claim. Entitled The Economic Impact of Air Service Liberalization, the study indicates that it has “found extensive and significant evidence that supports the generally accepted “conventional wisdom” that liberalization of air services between countries generates significant additional opportunities for consumers, shippers, and the numerous direct and indirect entities and individuals affected by such liberalization.’

The study also traces how open skies improved air services, opened up markets and created jobs. For instance, Open Skies Agreements for the United Arab Emirates led to the growth of Dubai as a major international hub, and domestic deregulation in India spurred the growth of low-cost carriers. Deregulation was also credited with job expansion worth millions

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of dollars, e.g., the US-Canada Open Skies policy, which created 455 new jobs worth Canadian$ 59.6 million.

ASEAN Open Sky. December 1995, during the 5th Association of South East Asian Nations (ASEAN) Leaders Summit in Bangkok, ASEAN heads of state agreed to develop an open sky policy in the region.

The Bangkok Summit Declaration of 1995 (ASEAN Plan of Action in Transport and Communications for 1994-1996), the ASEAN Transport Ministers (ATM) Meeting in Bali, Indonesia in 1996 (Competitive Air Service Policy), the 1997 Integrated Implementation Program for the ASEAN Plan of Action in Transport and Communications, and the ASEAN Multilateral Agreement on Air Services signed in Manila in 2009 all support the adoption of an inter-ASEAN open skies policy.

Open Sky-ready? In an interview with the ABS-CBN News Channel (ANC), former Tourism Secretary Alberto Lim said that the ‘Pocket’ Open Skies Policy is a crucial first step in achieving the government’s goal of doubling tourist arrivals from 3 million to 6 million in 2016. President Aquino hopes to implement a full open skies policy by the end of his term.

While there is no question that the adoption of an open sky policy would be a major factor in promoting increased travel and the growth of the airline industry, several other factors need to be considered with regard to the country’s readiness to adopt it.

The first is the question of reciprocity raised

by Philippine air transport companies, which EO 29 has not addressed. Opening our skies to foreign airlines without the

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guarantee that our local companies would be provided similar freedom rights in foreign lands only exposes our air transport companies to unfair competition right here in their own country.

Second is infrastructure. Apart from NAIA, the country has 10 airports with facilities for international landings, namely: • DMIA in Pampanga • Subic Bay International Airport in Bataan • Laoag International Airport in Ilocos Norte • Mactan International Airport in Cebu • Puerto Princesa International Airport in Palawan • Iloilo International Airport in Iloilo • Kalibo International Airport in Aklan • Davao International Airport in Davao • General Santos International Airport in South Cotabato, and • Zamboanga International Airport in Zamboanga City.

Only a few of these meet international standards, however. Our premiere airport, NAIA, was ranked fifth-worst in a recent unofficial ranking of international airports; only two other Asian airports made the list: New Delhi (ranked 6th) and Bombay (8th). Some other airports in the country scheduled to be upgraded to suit the requirements of international flights (e.g. Bohol) have yet to be completed.

Also, Business Mirror reports that communications systems in the country’s premiere airport have yet to be completed nine years after it was started.

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Corollary to airport facilities is the presence of support facilities, such as roads to and from the airports and other infrastructure to facilitate travel. In the same interview, Secretary Lim explained that the Aquino administration’s PublicPrivate Partnerships program would provide the necessary infrastructure.

Disregarding other important factors? Pinning our hopes solely on the Open Sky Policy to dramatically increase tourist arrivals and make the country more competitive in Asia would be to disregard the other reasons why tourists prefer to visit neighboring countries.

The lack of transport infrastructure to expand the visitors’ travel options used to be among the reasons why the Philippines was less preferred as a tourist destination.

Tourists indicated that there were many places they wanted to visit but it was difficult for them to travel from one tourist spot to another, This challenge was partly resolved with the opening of new Roll-On Roll-Off routes and the improvement of major roads, which enabled visitors to travel fast and inexpensively from one tourist spot to another. Time and typhoons have taken their toll on a number of these roads. Unless follow-up improvements and repairs can be done on these avenues, we will be losing vital support for our tourism industry.

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Phased approach recommended for ASEAN Based on the study “Preparing ASEAN for Open Sky,” negotiating air transport agreements will prove to be a challenge, more so between and among countries with different levels of economic growth and airline capabilities.

According to the Asian Economic Institute, “slow transition to an open sky policy, allowing the smaller airlines to establish themselves before entering into competition, allowing the needed growth, improvement of infrastructure, and gaining of skilled workers, is a suggested way to enter into the agreement.”

The ASEAN Action Plan 2005-2010 approved by the ASEAN Transport Ministers stated among its goals for transportation thus: “. . . to intensify regional activities to enhance multimodal transport linkages and interconnectivity, promote the seamless movement of peoples and goods, promote further liberalization in the air and maritime transport services, and further improve integration and efficiency of transport services and the supporting logistics systems. … work towards developing a regional action plan for staged and progressive implementation of Open Sky arrangement in ASEAN.” The “Roadmap for Integration of Air Travel Sector,” an appendix to the ASEAN Sectoral Integration Protocol for Air Travel, detailed the progressive measures needed to implement an open sky policy in Southeast Asia, allowing members to negotiate multilateral, plurilateral or sub-regional agreements subject to certain schedules.

An ASEAN Single Aviation Market by 2015? The ASEAN Strategic Transport Action Plan for 2011-2015 sets an action plan to achieve three goals:

Another challenge which needs to be faced alongside the implementation of the Open Sky policy is the country’s positioning as a tourist destination.

Apart from Boracay, which has earned mention as one of the world’s best beaches, if not the very best, the country has yet to come up with a single image or type of tourist attraction with which it can be associated.

The country needs to find its own niche and define its unique offerings in order to set it apart from countries such as Indonesia, Malaysia, or Thailand. We need to project that single image while mentioning the many other things we have in abundance – our people’s warmth, scenic spots everywhere, affordable goods – and be remembered for it. This boils down to a focused marketing strategy where messaging plays a key role.

Infrastructure and spot-on promotions must be in place beforehand for the Open Sky policy to be effective.

Otherwise, it would be like putting the cart before the horse.

1. Establish an ASEAN Single Aviation Market (ASAM); 2. Promote environmentally-friendly aviation; and 3. Enhance engagement with Dialogue Partners to promote greater connectivity.

ASAM, patterned after the successful Single Aviation Market in Europe, is expected to spur tourism and economic growth in the ASEAN region.

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Why Filipinos Don’t Save

A look at factors that impact savings in the Philippines

By Marishka Noelle M. Cabrera

In an effort to encourage Filipinos to save more, the government is starting them young. Early in August, the Bangko Sentral ng Pilipinas (BSP) launched the Banking on the Children’s Future program that aims to instill the value of saving among children.

Toward that end, the central bank and 12 universal, commercial, and thrift banks signed a memorandum of agreement to accept savings accounts for deposits of P100 or less from children.

According to a BusinessWorld report on the launch, BSP Governor Amando Tetangco Jr. said the national savings rate “remains low,” as he cited BSP data indicating the banking system had 36.3 deposit accounts worth

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nearly P5 trillion, but also noted that 64% of those accounts had balances of P5,000 or less.

For decades, the Philippines has been battling the perennial problem of low household savings, which makes Filipinos extremely vulnerable to macroeconomic changes.

Results of the 2009 Family Income and Expenditures Survey show total family income at P3.8 trillion, while expenditures were at P3.2 trillion. Total savings amounted to P565 billion, or nearly 15 percent of total income. By way of comparison, household savings in India

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came up to 32% of household disposable income in 2008, while China’s household savings rate was 28% in 2008, according to the article “Rebalancing Growth in Asia,” in the December 2009 edition of the International Monetary Fund quarterly publication Finance and Development.

ASEAN members. “The Philippines’ low domestic savings rate was likely one of the impediments to the country attaining the high and sustainable growth rates achieved by many of its neighbors in the past several decades,” the paper surmised. (See chart 2 on the next page)

The chart below, also from the article, notes not just the two countries’ high household savings rates, but also that they continue to trend upward. (See chart 1)

A low domestic savings rate for a country means mean less potential for investment in key areas that can foster overall economic growth, such as infrastructure and human capital.

On the whole, the Philippines’ overall savings rate has always been modest, 26.6% of Gross National Income in 2009, lower than the 27.9% registered in 2008, according to BSP data from 2001 to 2009.

The Philippines continues to lag behind fellow ASEAN members.

In the Asian Development Bank (ADB) report, “Philippines: Critical Development Constraints,” data shows that despite some improvement in recent years, the Philippines continues to lag behind other

On the other hand, high savings and high investment rates can significantly transform economies, as in the case of Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Singapore, Taiwan, and Thailand between 1960 and 1990. The ADB Economics April 2009 working paper on “Saving, Investment, and Current Account Surplus in Developing Asia” posits that factors such as “sound macroeconomic policies, limited price distortions, human capital accumulation, strong civil service

Chart 1

Household savings

China’s and India’s household saving rates continue to rise.

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(percent of household disposable income)

30 25 20 15 10 5 1990

Korea India

China

92

94

96

98

2000

02

04

06

08

Sources: CEIC Data; and author’s calculations.

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Chart 2

However, in the ADB “Philippines: Critical Development Constraints” report, even when the Philippines’ per capita GDP was standardized with other East and Southeast Asian countries in terms of purchasing power parity (PPP), that the Philippine savings rate was still relatively low.

Figure 3.3

Comparison of Gross Domestic Savings, 1980 - 2006 (% of GDP) Indonesia Thailand

60

Malaysia

Philippines

Viet Nam

50 40 30 20 10 0

1980

1986

1992

1998

2004

GDP = gross domestic product.

Gross domestic savings for the Philippines is calculated as the difference between GDP and final consumption Sources: Data from NSCB (various years) for the Philippines and from World Bank (various years) for other countries

and institutions, and openness to foreign trade and technology” also contributed to what it calls the “East Asian miracle.”

Exploring possible reasons for low savings. Then again, one might argue that the income level of a country plays a pivotal role in the amount that it is able to save, since a low income level means having to spend more on basic consumption goods, which results in a lower savings rate.

There are some who say that individually, Filipinos may be actually saving more than what has been observed, just not in formal financial institutions. The Consultative Group to Assist the Poor (CGAP) report “Country-level Savings Assessment: Philippines” discusses substantial anecdotal evidence that suggests that low-income Filipinos have the capacity to save. The report says, “Informal savings mechanisms, like [Rotating Savings and Credit Associations or ROSCAs] (called paluwagan or dajong) or stashing money into alcancia bamboo poles at home, seem to be widespread throughout the country.

Self-help or solidarity groups that conduct savings and credit activities are also common.”

Interestingly, the ADB Economics October 2010 working paper “Who are the Middle Class and What Values Do They Hold?” shows that the middle class tend to save more than the upper and lower classes.

Distribution across Classes (percent) Upper Middle Lower

VARIABLE

Distribution within Classes (percent)

All

Upper Middle Lower

Family savings during past year Save money Just get by

Spent some savings and borrowed money Spent savings and borrowed money

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70.0

26.0

100.0

57.7

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15.2

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47.0

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42.7 9.2

47.5

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Why Filipinos don’t save

Spending on young dependents affects savings. Filipinos are also known to be deeply family-oriented, which can perhaps explain changes in household saving. A growing population of young dependents, for instance, is said to decrease the overall household saving rate because of expenditures such as education and health, according to the University of the Philippines School of Statistics’ October 2010 study “Getting Old Before Getting Rich: The Economic State of the Elderly in the Philippines.”

“Achieving a slower rate of population growth should be an explicit development objective of the country”

Similarly, a March 2006 study from the Philippine Institute for Development Studies on “Children and Household Savings in the Philippines” claims that “additional children will expose some more families to the risk of income shortfalls and much more so for poorer households” and could also “deprive households of the prospect of exploiting investment opportunities that come their way.”

“Achieving a slower rate of population growth should be an explicit development objective of the country,” a BSP-U.S. Agency for International Development technical report on “Patterns and Determinants of Household Saving in the Philippines” suggests.

Under normal circumstances, the act of saving tends to wane as a person gets older, specifically past retirement age, hence an aging population can contribute to a drop in aggregate savings. In countries like the Philippines, where it is the norm for the elderly to live with their adult-age

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children, the ADB Economics November 2009 working paper on “Explaining Filipino Households’ Declining Savings Rate” notes that “high household saving rates of households headed by older persons could reflect family composition rather than high individual saving rates of the elderly.”

Not a cultural thing. While Asians are perceived to be more frugal and inclined to make sacrifices today to save for the future, actual evidence correlating saving rates to cultural factors is scant. According to a U.S. Congressional Budget Office November 2010 working paper, “Why is China’s Saving Rate So High?”, China’s national savings rate of 54.4 percent of gross national income in 2007 was the result of fewer dependents, stronger economic growth, and a weaker social safety net.

Can we raise our savings rate to similarly high levels? In the Philippines, it is clear that increasing household savings, as well as national savings, is not an easy feat, considering the complex realities facing its citizens. Lack of financial flexibility is leaving many Filipinos at the mercy of creditors and unable to respond adequately to financial emergencies, let alone invest in profitable ventures.

When asked in a random, informal survey, Filipinos will likely attribute low savings to low income, given the reality that, in some cases, disposable income is already allocated to particular expenditures (or payment of debt) even before income is received. The World Bank March 2000 policy research working paper, “What Drives Private Saving Across the World,” suggests that private saving rates does, in fact, rise with the level and growth rate of real per capita income, and that the

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influence of income is larger in developing than in developed countries.

More OFW beneficiaries are saving. In the case of overseas Filipino workers (OFW) and their families, the BSP Consumer Expectations Survey (CES) for the 2nd Quarter of 2011 shows that more OFW beneficiaries are utilizing the remittances they receive for savings; from a mere 15.7% of OFW households in 2007 to 44% in the second quarter of this year. Similarly, the use of remittances for investments increased from 5.7% in the first quarter of 2011 to 6.8% in the succeeding quarter.

According to the ADB Economics December 2009 working paper “Remittances and Household Behavior in the Philippines,” studies on OFW households show that many recipients consider remittances to be “transitory income,” and therefore, save a larger proportion of what they receive.

With P18.76 billion worth of remittances in 2010, the government can indeed capitalize on their saving potential. In his Philippine Daily Inquirer column, Dr. Bernardo Villegas estimates, “There will be increasing opportunities for many more OFWs to return to the Philippines to invest in entrepreneurial ventures. There will be a virtuous circle of higher savings leading to higher investments which in turn can lead to higher savings.”

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Strengthening savings initiatives.

Another way to shore up savings is to continue or strengthen savings incentives, such as those found in the, which was enacted to encourage voluntary retirement saving among Filipinos who are not members of the Social Security System or the Government Service Insurance System.

Under the law, the contributor is given income tax credit equivalent to five percent of total PERA contribution, provided that he or she does not withdraw the funds before the age of 55.

Further, prudent macroeconomic management will ultimately minimize shocks that impact consumers due to fluctuations in the prices of basic commodities that feed into their purchasing power. In the afore-mentioned BSP consumer expectations survey, consumer outlook on family financial situation and income “slightly improved,” but the “continued increase in the prices of commodities dampened their sentiment on the economic condition of the country during the current quarter.”

Lastly, financial literacy, confidence in financial institutions, and the integration of far-flung, low-income households into the formal financial system will also be vital tools in improving savings in the country.

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world

Renewable Energy: The Technologies

A look at not just the wave of the future, but the sun and the wind as well

By Gary B. Olivar

The term “renewable energy” encompasses a dauntingly wide range of technologies both old and new— from the lowly cooking stoves used by the world’s rural households to burn firewood (biomass) for cooking, all the way up to bleeding-edge technologies barely off the drawing board that use ocean waves, the ebb and flow of the tides, even temperature differences at different ocean depths, in order to turn ultra-sophisticated turbines that generate usable electrical energy.

Clearly, such a broad definition of RE is tantamount to being no definition at all.

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In order to narrow it down to practicable scale, the following stipulation might be useful to add: energy that is reliably delivered from renewable sources at commercially viable costs, in the form of heat, locomotion, and electrical power.

This is a layman’s definition that captures the common elements among technologies as diverse as dumpsite methane plants that capture the gases from organic decomposition for cogenerated heat, to fuel additives like ethanol and biodiesel intended to reduce vehicular carbon emissions, to the giant dams that have long provided hydropower.

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Renewable energy: The technologies

Technology and costs. The key criterion is of course the cost to deliver. Differences in cost among renewable energy technologies depend not only on the inherent differences in their process characteristics—burning wood versus running water, for example— but more importantly on the relative levels of energy conversion efficiency, or what might be called the state of the art. At the same time, a larger user base enables two sources of cost advantage: the opportunity to amortize-down fixed technology costs on a unit basis, and the opportunity over time to improve efficiencies through experience, or learning.

The following chart from JP Morgan summarizes the current global situation in order to compare the typical energy costs of different RE technologies (in US cents per kilowatt-hour):

Dams and windmills are of course longstanding technologies, while geothermal has benefited from knowledge advances in exploration drilling and heat conversion operations.

At the other end of the spectrum are the newer and more advanced technologies, with solar in its different forms being the most expensive to date. Rooftop solar photovoltaic (PV) converters can run as much as 50 cents/kwH. Ocean-based technologies are not even shown on the chart because they are considered to be experimental in nature and a long way still from any kind of meaningful commercial deployment.

Progress on most but not all fronts.

Looking back at developments last year,

Status of Renewables Technologies, Characteristics and Costs Technology Generation

Typical Energy Costs (U.S. cents/kilowatt-hour unless inicated otherwise)

Typical Characteristics

Power Generation Large hydro Small hydro On-shore wind Off-shore wind Biomass power Geothermal power Solar PV (module) Rooftop solar PV Utility-scale solar PV Concentrating solar thermal power (CSP)

Plant size: 10 megawatts (MW) - 18,000 MV Plant size: 1-10 MW Turbine size: 1.5 - 3.5 MW Blade diameter: 60 - 100 meters Turbine size: 1.5-5 MW Blade diameter: 70-125 MW Plant size: 1-20 MW Plant size: 1-100 MW; Types: binary, single- and double-flash, natural steam Cell type and efficiency: crystalline 12-18%; thin film 7-10% Peak capacity: 2-5 kilowatts-peak Peak capacity: 200 KW to !)) MW Plant size: 50-5000 MW (trough), 10-20 MW (tower); Types: trough, dish

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3-5 5-12 5-9 10-14 5-12 4-7 --20-50 15-30 14-18 (trough)

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Renewable energy: The technologies

the Renewable Energy Policy Network for the 21st Century (REN21) sees progress made on most—though not all—fronts.

Summarizing the major highlights for each technology below: Wind – An additional 38 gigawatts (GW) was added worldwide in 2010 for a total capacity of 198 GW. For the first time, the majority of new capacity was added in developing countries or emerging markets, led by China. Among the important trends noted by the report are the continuation of ongoing offshore development projects; the continued popularity of community based and small grid-connected projects; and increases in turbine sizes to 5 MW and up.

Solar PV – Global capacity more than doubled to 40 GW in 2010, with the European Union (EU) leading the world. especially in Italy and Germany. Notable trends included a continuing shift to utility-scale plants (now numbering over 5,000 worldwide), and a shift in cell manufacturing facilities to Asia, where 10 of the top 15 manufacturers are presently located.

Concentrating Solar Thermal Power (CSP) – After years of inactivity, nearly 740 MW have been added to date since 2007, half of this in 2010 alone.

Highlights include the continuing market dominance of parabolic trough plants; continued challenges from solar PV due to declining costs in that segment, especially in the US; and more project development taking place in the Middle East and North Africa (MENA) countries.

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Solar Hot Water/Heating – Global capacity increased by 25 GWth in 2010 to reach a total of 185 GWth (excluding unglazed swimming pool heating). China continues to dominate the market for solar hot water collectors.

Biomass Power and Heating – This particular technology now provides the majority of heating applications among the different RE sources. About 62 GW of capacity was posted worldwide at the end of 2010. Trends included the increased use of solid biomass pellets, and more biomass usage in combined heat/ power (CHP) plants and centralized district heating; China still leads the world in number of household biogas plants.

Biofuels – Liquid biofuels accounted for 2.7% of all transport fuels used globally in 2010. Current trends include the recovery of the global ethanol industry due to rising oil prices, with production increasing 17% last year. Brazil and the US accounted for 88% of world ethanol production, but the EU still leads in biodiesel production, although it now faces growing competition from cheaper imports.

Geothermal – There were geothermal power plants in at least 24 countries, plus geothermal systems used for heating in at least 78 countries, for a total global capacity of 11 GW as of 2010. Although development slowed down last year, it is expected to accelerate in more countries due to new technological advances.

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Hydropower – This traditional RE source accounted for 16% of global electricity production last year. Another 30 GW of capacity was added last year for a total of 1,010 GW worldwide. Asia (led

by China) and Latin America (led by Brazil) are still the most active regions for new development projects.

Ocean – At least 25 countries are now involved in ocean energy development, with total installed capacity of 6 MW by last year-end, mostly in Europe, comprising wave (2 MW) and tidal stream (4 MW) technologies.

‘Here comes the sun’ The sun is, of course, our uber-energy source. But apart from directly providing light and heat, the sun used to play a more indirect role in producing other forms of energy—for example, by nourishing carbon-based organic life that eventually, after millions of years, became our fossil fuels. Today we’re applying human ingenuity to harness solar power more directly, either through direct photovoltaic conversion into electricity, or by concentrating solar heat in order to fuel generating capacity.

It’s a challenge that is political and commercial as well as technical in nature. In an October 2010 article on the renewableenergyworld.com website, Raymond Schoenfeld reports that the pick-up on solar is still slow, with only eight countries accounting for 90% of solar capacity a couple of years ago, according to the International Energy Agency. He discusses Thailand’s ambitious plan to increase its photovoltaic capacity fifteen

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times in fifteen years, from 35 MW in 2007 to around 550 MW by 2022. To date, the country has approved the installation of over 1 GW of solar capacity, announced plans for 92 solar projects that will add another 250 MW, and even convened a first-ever PV solar congress in March last year to highlight the seriousness of its plans.

Time reports on another emerging solar success story, which can be found, perhaps not surprisingly, in one of the world’s hottest regions, the Middle East. It’s taking place in the ongoing construction of Masdar City, the first urban development that will be powered entirely by renewable energy.

But it’s also ironic that this new city is located in Abu Dhabi, the oil-rich Arab kingdom that was recently targeted by the World Wildlife Fund as the world’s leading contributor to the global carbon footprint.

Where irony becomes environmental opportunity is the spectacle of literally billions of petrodollars being invested in making Abu Dhabi the world’s “hub of future energy”, in the enthusiastic words of Sultan Ahmed Al Jaber, the CEO of Masdar City. “Nowhere else in the Middle East has there been such a commitment to clean energy,” he says of his country’s growing investment in clean-technology companies, a sustainability research center, major green-power developments, and Masdar City itself.

‘The answer is blowing in the wind’ Not far behind the sun as a perennial energy source is the wind, which has long powered sailboats and windmills, and today benefits from more reliable locational research and more efficient plant designs. If it is in the hot Middle East where a lot of solar excitement can be found, it is in Asia—with

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its varied topographies across vast expanses of land and water—that most of the growth in wind power is now taking place.

A February 2011 article from the renewableenergyfocus website reports that global wind power capacity grew by 22% in 2010 to a new level of 194.4 GW, according to the Global Wind Energy Council (GWEC). Despite the new investments last year of about 47.3 Billion Euros, however, the number of new installations actually fell by 7%, for the first time in 20 years. The main culprit, expectedly, was the financial crisis, which reduced electricity demand and the number of new turbine orders.

In 2010, for the first time, more than half of new installations were outside the West, with Asia taking up 19 GW of additional capacity, led by China with 16.5 GW. According to Li Junfeng, secretary general of the Chinese Renewable Energy Industry Association (CREIA), “China has already surpassed the US in terms of total installed capacity [of wind power]...At the same time, China has also become the world’s largest producer of wind energy equipment.”

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TOP 10 NEW INSTALLED CAPACITY JAN - DEC 2010 Rest of the World Sweden Canada U.K. France Italy

CHINA

Germany Spain India

USA (from the Global Wind Energy Council)

An April 2011 piece from the greentechmedia.com website reports that China-based Goldwind, the world’s largest manufacturer of wind turbines, are already setting up sales and service organizations inside the United States. Half of the manufacturing content is being sourced within the US, and it may not be much longer before the rest of manufacturing operations—following the long and honorable tradition set earlier by the Japanese auto industry—will be relocating as well from China closer to their global target markets.

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The Power and the Pitfalls of Social Media

Is social media facilitating rapid change or just fostering an illusion of activism?

By Tanya L. Mariano What started out on August 6 as a peaceful protest against the fatal shooting by police of 29-year old Tottenham resident and suspected gang member Mark Duggan quickly escalated into a four-day spectacle of looting, arson, and rampant hooliganism resulting in damages estimated at more than ÂŁ200 million ($327 million), according to the Association of British Insurers (ABI), and the arrest of some 2,000 people (as of August 25),based on data from the Metropolitan Police Service.

of Manchester, Birmingham, Nottingham, Wolverhampton, and Liverpool, as illustrated in a timeline of the events and a map chronicling the spread of the riots on the BBC website.

From Tottenham, the violence spread to Hackney, Lewisham, Peckham, Woolwich, Ealing, and Clapham in London and then to the major cities

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UK newspapers The Daily Mail and The Sun were quick to point out the role of popular social media platform Twitter in fueling the riots, with The Sun saying that thugs used Twitter to increase their numbers, quoting tweets encouraging more people to come out and join the looting.

In one widely circulated tweet, a user that goes by the name of “English Frank”said: “Everyone up and roll to Tottenham f*** the 50 [police]. I hope 1 dead tonight.”

Twitter or BlackBerry? However, while mainstream media initially put the blame on Twitter, blogger Jonathan Akwuewas was one of the first to suggest that the BlackBerry played a bigger role in crowd mobilization. Akwue observed that various tweets seemed to indicate that the BlackBerry Messenger (BBM), the mobile phone’s BlackBerry-to-BlackBerry group messaging system, was the social network

of choice during the riots. According to him, BBM “has become popular for three main reasons: it’s fast (naturally), it’s virtually free, and unlike Twitter or Facebook, it’s private.” In order to chat with each other through the secure-access network, BBM users need to exchange PINs. Recent research by the UK Office of Communications indicates that the BlackBerry is the most popular smartphone among UK’s young adults and teens. Previously, Canadian police have complained that criminals prefer communicating over the BlackBerry because it is wiretap-proof.

The last time Mark Duggan’s fiancée heard from him was when he sent her a message, through his BlackBerry, saying, “The Feds are following me.”

SMARTPHONE BRAND CHOICE AMONG USERS 100%

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2 2 6

3 1 6

1 2 5

9

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24

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12 12

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3 1 6

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12 8 11

3 6 11 11 9 8

2 4 6 12 8 13

Other/DK LG Sony Ericsson Samsung

23

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2 5 9

13

18

37

28 44

Nokia HTC-Android

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34

29

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25

Male Female 16-24 25-34 35-54

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ABC1 C2DE

17

Blackberry

24 10

Apple iphone

Teens Male Female Teens Teens

Source: ofcomomnibus research, March 2011 Q.4 Which make of Smartphone do you have? If you use one Smartphone, please tell me about the one that you use most often.

Base: Total GB Adults aged 16+ with a Smartphone (n =474).

Base: Total GB teens aged 12 - 15 with a Smartphone (n=243).

Source: UK Office of Communications

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The power and the pitfalls of social media

In the aftermath of the riots, Research in Motion (RIM), maker of the BlackBerry, released a statement promising to aid authorities in the investigations. This, however, prompted riot supporters to react by hacking the RIM corporate blog.

The hacker, “TriCk - TeaMp0isoN,” left a post saying, should RIM assist the police, “We have access to your database which includes your employees information; e.g - Addresses, Names, Phone Numbers etc. - now if u assist the police, we _WILL_ make this information public and pass it onto rioters ... do you really want a bunch of angry youths on your employees doorsteps?”

RIM has since taken down the blog.

Recent unrests fueled by social media.

This isn’t the first time that social media is being credited for facilitating an uprising.

An article by Scientific American lists five recent uprisings that made use of social media and other new media platforms to facilitate communication and organize calls for action.

First cited was the 2009 election protests in Iran, which has been dubbed the “Twitter Revolution.” People who were protesting the disputed reelection of President Mahmoud Ahmadinejad took to Twitter to disseminate information about and gain support for the protests.

Next was the Tunisian Revolution the following year, which relied on Facebook and the blog run by Netherlands-based organization Nawaat.org to facilitate discussions of the protest against the government of President Zine El Abidine Ben Ali and to organize rallies that eventually removed the president from power in January 2011.

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In the Egyptian revolution, however, the article credits Twitter and other social media tools for “enabling many of the demonstrations in Tahrir Square,” but suggested that, “more traditional and widespread forms of communication [such as the satellite TV offering uncensored Al Jazeera news coverage] might have been responsible for disseminating much of the news.”

In February 2011 in China, people began calling for a “jasmine revolution” on Twitter and Boxun, an overseas Chinese community news site. The Chinese government blocked searches of the word “jasmine,” and Boxun was hacked via a denial of service attack.

Lastly, the article cited the London riots and suggested that perhaps rioters favored the BlackBerry to “avoid more public association with lawlessness, as would happen if one were to post about looting on a social media network.” Interestingly enough, Twitter, other than being a good place for a spectator to receive constant updates of events related to the riots, has also been used to organize riot cleanups after the four-day mayhem.

The Twitter account, Riot Clean Up, currently has 78,228 followers.

Although not mentioned in the article, Moldova was also said to have had its own “Twitter revolution” back in 2009.

Social media and global politics. Much has been said about the power of social media in effecting rapid political change.

Because it is a convenient and relatively affordable tool that can easily reach millions across the globe, many activists are increasingly relying on it to communicate with each other, organize collective action, and rally support for their causes.

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The power and the pitfalls of social media

However, in “The Political Power of Social Media,” an essay published in Foreign Affairs magazine, author Clay Shirky, one of the more vocal believers in social media’s capacity to instigate change, points out that while, for the most part, “the focus has been on the power of mass protests to topple governments, the potential of social media lies mainly in their support of civil society and the public sphere.”

In response to US Secretary of State Hillary Clinton’s call for Internet freedom, Shirky suggests, “the U.S. government should maintain Internet freedom as a goal to be pursued in a principled and regimeneutral fashion, not as a tool for effecting immediate policy aims country by country.”

Also in this essay, the author discusses what he considers to be the first instance that social media facilitated the overthrow of a national leader: in 2001, text messaging enabled protesters in the Philippines to organize rapidly and on a massive scale, leading to the downfall of then-President Joseph Estrada.

The deepest and longest political effect of social media is “principally in allowing people, who are discontent with their government, to find each other, to coordinate their feelings and to decide to take action,” Shirky said, in a separate interview with Public Radio International’s The World.

Promoting “slacktivism,” weaktie connections, and inefficient networks? The positive effect of social media on fast and efficient mobilization and information dissemination has not gone unnoticed, but it is also not without its critics.

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Evgeny Morozov, one of the biggest critics of “cyber-utopianism,” the belief that the Internet plays a significant emancipatory part in global politics, warns that social media is encouraging “slacktivism,” online activism that has little or no socio-political impact, usually demanding nothing more than joining a Facebook group or signing an online petition. According to Morozov, it gives participants an “illusion of having a meaningful impact on the world.”

Author Malcolm Gladwell seems to share this sentiment, saying, “Social networks are effective at increasing participation— by lessening the level of motivation that participation requires … In other words, Facebook activism succeeds not by motivating people to make a real sacrifice but by motivating them to do the things that people do when they are not motivated enough to make a real sacrifice.”

In an article in The New Yorker, Gladwell also puts forth an argument against the effectiveness of social media as a tool for promoting political change, saying that it favors weak-tie connections that are less likely than strong-tie connections developed through face-to-face meetings to result in high commitment and individual sacrifices, and that it fosters the creation of decentralized networks, which are less effective than hierarchical organizations with a clear chain of command.

Decentralized networks are discussed in the Harvard University report, “Political Change in the Digital Age: The Fragility and Promise of Online Organizing.” According to the paper, “Compared to more tightly structured hierarchical organizations, flash mobs [hastily-assembled groups] do not have the same level of leadership, discipline, long-term planning and ability

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The power and the pitfalls of social media

to incorporate prior experience. In other words, flash mobs do not deliberate; they do not debate the alternatives and select pragmatic and well informed strategic approaches.” The challenge, then, for “improving the prospects of digitallyassisted political reform in closed societies that must rely on decentralized networks is to adapt, emulate and transfer the benefits of highly organized civil society groups” while maintaining a bottom-up decentralized organizational structure, which has a higher chance of survival in repressive regimes.

among other things, how some regimes use the new media to stifle or neutralize dissent.

Source: RSAnimate

Challenges in using social media and other Internet-powered tools.

There are other challenges in using social media and other Internet-powered tools to communicate and organize dissent. In an Association for Progressive Communications (APC) issue paper, “Twitter revolutions and cyber crackdowns: user-generated content and social networking in the Arab spring and beyond,” the author cites that user-generated content can be used to spread propaganda, and its reliability and veracity can sometimes be questionable. Moreover, just as it can be used to promote democracy, so can it help oppressive regimes crackdown on protests and harass cyber-activists.

In a lecture he gave in 2009 at the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) entitled, “The Internet in Society: Empowering or Censoring Citizens?”, Evgeny Morozov spoke against overstating the power of new media, and questioned whether it can actually help bring democracy to countries under strict regimes. Below is an interesting annotated, animated version of his speech, also produced by RSA, in which he talks about,

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The future of social media. The recent London riots and a number of past uprisings are testament to the immense mobilizing and organizing power of social media. As International Business Times writer James Lee Phillips says, “While the difference between a protest and a riot may be largely a matter of whether or not one identifies with the ruling political administration, it is undeniable that the unique features of social media and wireless technology make both types of mass action more effective.”

A report from the United States Institute of Peace analyzes the effects of new media on five different levels: individual transformation, intergroup relations, collective action, regime policies, and external attention. According to the report, there remains “massive gaps in knowledge” regarding the many effects of new media, and the authors warned people to be “skeptical of sweeping claims about the democratizing power of new media” as they are only “one among a number of important political factors.” The report suggests that further exploration using the five-level framework of the impact of new media should be undertaken to better understand its effects and to guide policymaking.

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The power and the pitfalls of social media

Social media and other new media tools will continue to shape how the world communicates, and users are not likely to permanently log out of Facebook or Twitter or stop chatting through their BlackBerries anytime soon. Referring to a recent survey of 6,295 respondents between the ages of 13 and 74, Charlotte Patrick, principal research analyst at the information technology research and advisory company Gartner, says, “Overall, our survey underlined respondents’ continued enthusiasm for social media.”

Thirty-seven percent of respondents, mostly from younger age brackets and more tech-

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savvy segments, reported that they were using their favorite social media site more.

However, the market is beginning to show some signs of maturity, as some users are exhibiting “social media fatigue,” with 24% of respondents saying that they now use their favorite site less than when they first signed up.

Still, it is clear, that a deeper understanding of both the benefits and risks of the use of social media to achieve social and political change is essential in order to avoid misusing a technology that has such a massive reach.

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