Was at this boss’ office, waiting for a meeting and couldn’t help but admire the artwork on his walls. Took a few quick shots before he returned (he stepped out for a phone call).

I’d like an office to be something like this one day. right now its still a (functional!) hole, I mean, blank canvas.

SWS Media Release / 10 May 2010    

Mahar Mangahas

Today, May 10, 2010, Social Weather Stations, in cooperation with the School of Government of Ateneo de Manila University,  is conducting a national exit poll sponsored by the PLDT-SMART Foundation, Inc., for exclusive broadcast by the Associated Broadcasting Company (TV5), to be known as the “TV5-SWS EXIT POLL.” 

The TV5-SWS Exit Poll adheres to the requirements set by the Fair Election Act’s Section 5.5 on exit polls.  This requires interviewers to (a) stay at least 50 meters away from polling centers, (b) wear distinctive TV5-SWS Exit Poll clothing and carry TV5-SWS Exit Poll identification cards; and (c) inform respondents that they may refuse to answer.  The Act says that the results “may be announced after the closing of the polls on election day, and must clearly announce the total number of respondents, and the places where they were taken” and that the “announcement shall state that the same is unofficial and does not represent a trend.”

SWS previously conducted exit polls in the national elections of 1995, 1998, 2001 and 2004.  Those previous polls were all conducted on election-day, in the homes of a random sample of respondents who had already voted earlier in the day.  Conducting an exit poll in homes rather than at polling locations is valid under the Guidelines for Exit Polls and Election Forecasts of the World Association for Public Opinion Research (WAPOR), written by the WAPOR Exit Poll  Committee of which I was a member, and approved by the WAPOR Council in 2006.

This year, however, the TV5-SWS Exit Poll is conducted not in homes but at the polling centers, 50 meters away.  This enables the interviews to be done, as in the developed countries, throughout the day.  The interview results are transmitted to the SWS office in Quezon City, and processed to produce the exit poll results for broadcast on TV5 as soon as completed, and lawfully allowed.

SWS is conducting the TV5-SWS Exit Poll with its own regular staff and a special complement of direct hires for added interviewing and data processing capacity.  Starting in mid-2004, SWS has accomplished all field and data processing operations internally, without outsourcing. 

The questionnaire for the TV5-SWS Exit Poll was designed in cooperation with the Ateneo School of Government (ASoG).  In addition to asking about the votes for President, Vice-President and Senator, it has several question items, in addition to standard demographics (gender, age, education, socioeconomic class, religion, charismatic group, and home language) to enable substantive analysis of the 2010 vote.  The TV5-SWS Exit Poll analysis will be done by SWS in cooperation with ASoG.

SWS is entirely responsible for the sampling of the TV5-SWS Exit Poll. The poll is being conducted in 802 Voting Centers (VCs) nationwide, covering all provinces from Batanes to Tawi-Tawi, and chartered cities of the Philippines.  The regional distribution of the TV5-SWS Exit Poll sample of VCs, after proportional allocation according to the official 2010 number of Registered Voters (RVs) in the said provinces and cities, is as follows:

NCR  -  96

CAR   - 15

Region I  - 45

Region II  - 31

Region III  -  88

Region IV- A  -  107

Region IV-B  -  23

Region V -  44

Region VI - 62

Region VII  -  62

Region VIII  -  38

Region IX  -  29

Region X  -  38

Region XI  - 40

Region XII  -  32

ARMM  -  30

CARAGA  - 22

Within each province/city, the sample-VCs are chosen with probability proportional to their number of RVs.  In each VC, SWS fields normally two interviewers (sometimes one, if the VC is small); the total field group, including support staff, is over 1,700 persons.  SWS has over 100 encoding stations at its main office to accommodate the incoming interview reports.

The interviewers of the TV5-SWS Exit Poll have been trained to behave in a strictly non-partisan manner at all times.  They are to invite voters to be interviewed at a steady pace throughout voting hours; they may not accept voters who volunteer to be interviewed.  For the sake of privacy, interviewees’ names are not recorded; interviewees are given a thank-you card with the name of their interviewer.  The TV5-SWS Exit Poll aims for an average of 40 interviews per VC, or a national sample of about 32,000 interviews.  The national sampling error, though still to be ascertained, is expected to be below 1%.

The results of each VC will be weighted by its present number of RVs, multiplied by the actual voting turnout percentage in the last presidential election year (2004), to progressively obtain provincial/city results, regional results, and national results.  However, the voting results for national positions may be reported at the national level only, at which the sample is maximized; it is not necessary for an exit poll to reach conclusions about sub-jurisdictions.

#

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Social Weather Stations
52 Malingap St., Sikatuna Village, Diliman, Quezon City 1101
Tel: (632) 924-4465/56
Fax: (632) 920-2181
SWS website: http://www.sws.org.ph 
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Philippine Daily Inquirer

August 22, 2009

Study poverty more than GNP

By Mahar Mangahas

When IMF chief economist Olivier Blanchard claimed, last Aug. 18, that the recovery of the global economy has started, he was being optimistic specifically about forthcoming growth in world output (the sum of all countries’ Gross National Products), and not about forthcoming reductions in world poverty as well.

Probably Mr. Blanchard, like establishment economists in general, assumes that reduction in poverty automatically results from growth in GNP. For sure, he cannot quantify—indeed, no one can quantify—the short-run impact of GNP on poverty, simply because world statistics on poverty are produced in dribbles, only once every few years, whereas world figures on GNP gush out in a steady quarterly stream.

The sheer availability of the GNP data stream fostered the concentration of economic research on the dynamics of production rather than on the dynamics of poverty. This stream produced its own terminology—such as the definition of a recession as two successive quarterly declines of GNP, which is operational only if the latter is measured quarterly.

Now, what does the term “recession” imply for the dynamics of poverty? Does poverty increase as soon as GNP declines? Can it be stalled and/or alleviated by safety nets? For how long will there be an increase in poverty—will it be two successive quarters? Just as business cycle analysts gauge how long it takes for a recession to hit bottom, poverty specialists should gauge how long it takes for poverty to peak. Finding answers to questions like these is not easy. But the way to do it certainly starts with having statistics on poverty as regularly as on GNP.

Unfortunately, there is very little pressure from the international development institutions to promote the frequent measurement of poverty, notwithstanding the adoption of so-called Millennium Development Goals to radically reduce poverty and hunger throughout the world.

The Philippine quarterly statistics on poverty are exceptional. To my knowledge, the most rapid statistical tracking of poverty in the world is here in the Philippines, on account of the SWS quarterly surveys of poverty and hunger. With the official figure on poverty now three years out of date, and that on hunger now six years old, the SWS figures have, for some time, been the only ones used (with the source unmentioned) in State of the Nation Addresses.

The self-rating system may not be standard, but it is nonetheless valid. Above all, it is economical and practical. Our latest numbers, for the Second Quarter of 2009, are 20.3 percent of families suffering from involuntary hunger (released July 27, 2009) and 50 percent rating themselves as poor (released Aug. 4, 2009). The poverty series is quarterly from 1992, and the hunger series is quarterly from 1998; all are welcome to use them.

If anyone knows of any other country in which national poverty is measured quarterly, by whatever technique, please let me know. Be aware that the subjective measurement of well-being is, slowly but surely, becoming increasingly accepted around the world.
My dream is for poverty and hunger to be incorporated into econometric modeling of the Philippine economy, to enable joint analysis of economic growth and equity for the first time. The scale of such modeling work is beyond the resources of SWS; just keeping the data series going is already a significant job.

As a starting point, let me mention some peculiarities in the time patterns of Philippine poverty and Gross National Product—which is more meaningful than Gross Domestic Product or GDP. GNP is larger since it includes the contribution of overseas Filipino workers.

Philippine GNP has some seasonality. It always peaks in the fourth quarter (Q4), and then subsides in Q1. It rises a bit in Q2, is steady or else falls in Q3, and then peaks in Q4 again. On the other hand, neither poverty nor hunger has noticeable seasonality.

Discounting its seasonality, Philippine GNP has been rising steadily in the past two decades. But, since Philippine poverty has not been falling steadily, one can see that the relationship between GNP and poverty is not at all close. Actually, poverty has been quite volatile. In a matter of two quarters, the poverty percentage is capable of falling from 60 to 50, as well as rising back up to 60. But since the last time it hit 70 was already 15 years ago, I can concede that steady economic growth eventually lowers poverty.

To find the determinants of a volatile variable, one must consider factors which are also volatile. My first candidate to explain why poverty has been volatile is the factor of inflation. The record-high 74 percent self-rated poverty in 1985 occurred after hyperinflation of two years. Later on, general inflation ranged from zero to 20 percent.

A gain in the income of the poor can be wiped out by a burst of inflation. GNP growth by 4 percent with inflation at zero computes as equal “in real terms” to GNP growth of 9 percent with inflation at 5 percent; but the latter is clearly onerous to the poor. As the poor may be differentially affected by inflation of the price of food, the price of electricity, etc., these should be separately examined.

At present, the development experts aim mainly for GNP growth, and assume that it will be good for the poor someday. I would rather that, by studying the dynamics of poverty, they instead learn how to reduce poverty steadily, and just let the GNP fend for itself.

Oil smuggling: A big governance test for Ate Glue
DEMAND AND SUPPLY By Boo Chanco Updated July 03, 2009 12:00 AM

According to Ramon Ang of San Miguel who is also running Petron, oil smuggling is causing government to lose as much as P30-billion a year. That looked like a large figure to me so I checked it out and found out that Ramon is in the right ball park if one considers the trajectory of rising oil prices in recent weeks.

The P30-billion government revenue leak is based on oil priced at $150 a barrel. At today’s prices, the loss is about P12 to P15 billion. But this excludes loss in corporate income tax as smugglers do not pay income tax. If you put that in, that brings you to Ramon’s estimate. It is a large number and given government’s current budget deficit problems, government’s first order of business should be to stop this oil smuggling.

I asked an oil industry expert and he estimates that about 30 percent of diesel sold in country is smuggled. There is gasoline smuggling as well at roughly five to10 percent of gasoline sales. In other words, you can say that 15 percent of this country’s total oil consumption is smuggled and thus not paying taxes.

Diesel accounts for 40 percent of total demand for petroleum products. Smuggled diesel accounts for 30 percent of total diesel. That means, a large part of diesel used in this country does not pay VAT and Duty of P4.50 per liter (12-percent VAT is levied on top of three percent duty).

Gasoline is 30 percent of total demand for oil products. Smuggled gasoline accounts for an estimated 10 percent of total gasoline sold in this country. That means we have all that gasoline that is not levied VAT and Duty plus excise = P8.85 per liter (specific tax is P4.35 per liter plus P4.50).

Aside from government losses in terms of uncollected taxes and duties, smuggled fuel products also pose unfair competition to the oil companies that play it by the book. Oil smuggling is also turning out to be a serious peace and order problem.

The grapevine in the oil industry is rife with stories of how foreign criminal syndicates have actually taken over a large part of the oil smuggling operations here. I guess these syndicates have economies of scale since they do it in other countries and they probably carry other products too that are considered contraband.

Most of the oil smuggling is being carried out in Subic Free Port. The Americans left petroleum loading and receiving facilities and a tank farm there with a pipeline to Clark. The government leased it to Coastal Petroleum, a pretty decent company with pretty decent people behind it, including the family of a former high official of Petron.

The problem, I am told, is that Coastal is allowing other traders to use the facilities including the pipeline to Clark. Then, Coastal conveniently disowns any responsibility for any hanky panky that happens. Of course, the customs officials at Subic and at head office in Manila too, must be profiting from all that smuggling.

The lease for the Subic facilities is a paltry P150 million a year, compared to the P30-billion tax leak. There should be enough legal reasons for government to cancel that lease and for the meantime, run the facility itself under strict supervision from an elite group of enforcers from DOF, BIR and Customs. That is assuming of course, there are honest people left in those agencies who can be entrusted with the work.

Oil smuggling is a good governance test for Ate Glue. If she can really stop the smuggling in her remaining days (assuming she is leaving next year), she will leave one clear accomplishment. She will also disprove rumors that people very close to her are profiting from oil smuggling.

Recovering revenues that are currently lost by government is a clear benefit. Showing she is capable of good governance to the surprise of most Filipinos, is another benefit. Still another benefit is stopping the foreign criminal syndicates from gaining a foothold in this country with the help of their local partners. Look at what’s happening to Mexico after the criminal syndicates practically took over the country. They may be smuggling oil today but it is an easy jump to drugs and other contraband. The system of evading law enforcers or corrupting them is the same.

And don’t believe anyone who says there is no oil smuggling taking place. The numbers provide the evidence. Total oil product demand (net of industrial fuel oil used for power) has declined by an average of -1.2 percent a year. Diesel has declined by 0.6 percent. Yet, you and I know there are more and more cars and trucks added every year. In fact, car registration has grown by an average of 5.5 percent a year. How can there be more cars and trucks yet less fuel being used?

Ate Glue should use her penchant for micro management and assume the title of anti smuggling czar so this problem can be dealt with once and for all. Success in this effort will generate success in other areas as bureaucrats get the message that finally, she really means to do the right thing. That would help generate tax revenues in other areas of the economy that currently evade paying their dues. When potential investors see the rule of law starting to reign, more of them will come to risk capital here.

Hopefully, Ate Glue is interested in saving the one legacy she can claim thus far… good fiscal management. That legacy is in danger of going down the drain in her final months as the budget deficit reached P123 billion for the period January to May 2009.

Government assurances that it will achieve the full year deficit target of P250 billion is hardly credible. Fears have been publicly expressed by some financial institutions, that this target can be breached to reach as high as P400 billion.

But even if they hit this target, that number is in itself worrisome. This will be the highest nominal deficit incurred by the National Government. This will constitute 3.2 percent of GDP: while not the highest historically, it will breach the three percent threshold that economists consider sustainable.

Francis Varela of the Foundation for Economic Freedom has written that “whether the 2009 deficit will be P250 billion or P400 billion, we have a looming fiscal crisis ahead of us. The current trajectory of revenues vis-à-vis expenditures points to a further widening of this deficit in 2010.”

Tax collections by the Bureau of Internal Revenue and Bureau of Customs have dropped by 6.6 percent. If sustained for the rest of the year, this will be the first time that government revenues will have registered a nominal decline. On the other hand, expenditures have grown 15.6 percent to date.

Then again, the IMF once observed that the understatement of imports (how technocrats politely refer to smuggling) is due to “election related lenience” or what less diplomatically constrained people may call “state sponsored smuggling”. If so, given the stakes are higher for 2010, smuggling can only get worse to raise campaign funds.

Ate Glue must make an example of oil smuggling if she wants to deliver the message that she isn’t as hopeless as many of her countrymen think she is. She can salvage her tattered reputation by a no nonsense anti oil smuggling drive. Indeed, oil smuggling is a good test of governance for Ate Glue. Will she pass it? Will she even take up the challenge?

Fiscal deficit

Here’s a one liner attributed to Ronald Reagan.

“I am not worried about the deficit. It is big enough to take care of itself.”

Repost of Boo Chanco’s June 10, 2009 article in Philippine Star. Put it here ‘coz it’s hard to link to the PhilStar site which requires people to have to register first.

Admin: Too defensive on economy
DEMAND AND SUPPLY By Boo Chanco Updated June 10, 2009 12:00 AM

I was going through my e-mail which piled up during the three weeks that I was traveling. What caught my attention was a press release from NEDA that was quoting anecdotal evidence from various private sector businesses to prove that the economy is not in decline. That’s it… when the numbers tell another story, go ahead and tell stories that mask the reality captured by the numbers.

It must be the official spin. Deputy Presidential Spokesman Anthony Golez also actually described the 0.4 percent economic growth reported by the National Statistics as “good news.”

“That 0.4 percent growth is still growth,” Golez crowed. Maybe Golez should go back to the practice of medicine, and hopefully he is more competent with that. It has been proven time and again he definitely has no idea what he is talking about when he comments on economics.

Another deputy presidential spokesman, Rolando Tungpalan, said the Philippines is still faring better than its neighbors. He noted that in the same period, Singapore’s economy contracted by 10.1 percent, Taiwan’s by 10.2 percent, Hong Kong’s by 7.8 percent, Thailand’s by 7 percent and Malaysia’s by 6.2 percent.

He did not say that our neighbors are working on much larger economic bases so that citing those percentages smacks of intellectual dishonesty for someone who should know better. As was pointed out by a daily, Thailand’s per capita GNP is about two and half times ours, at the lower end of the scale, and Singapore’s at 16 times ours, at the higher end.

The administration’s insecurity over its economic record was highlighted by a paid advertisement showing numbers comparing its performance with other administrations. My first reaction was to wonder if the numbers are comparable. I remember Dr Philip Medalla saying that they aren’t.

One comment in an e-group of economists I am a part of: “What is the meaning of her 5.6 percent score in “Balanced Budget” versus her predecessors’ 4.1 percent, 3.9 percent, 4.1 percent and 3.2 percent? Is this average budget deficit for entire term as percent of GDP? (Why is a bigger number better?) Maybe the other PhD’s in our e-group can help us undereducated guys (and the general public) understand this statistic that a UAP professor and the UP PhD program’s most prominent graduate (with the help of PR spin masters) are trying to convey?”

I think the administration is being too defensive on the economy after a career technocrat told a news conference that the numbers gathered by the statistics office show the country is teetering on a recession. Indeed, the numbers do indicate such a trend which is not surprising since most key economies in the world have already fallen into recession.

What the administration ought to do is to tell our people the true story once and for all so people know the real score. That way, people can prepare themselves… take necessary actions to mitigate the impact of such a negative economic development on their lives.

There are enough respectable local economists who think that we are not only teetering towards economic contraction but that our economy has already contracted. One analysis I saw showed us to be already in recession. It noted that “discounting for the contribution of statistical discrepancy, growth for two consecutive quarters already negative: -4.98 percent in 4Q08 and -1.97 percent in 1Q09.”

For another thing, economic data supplied by government are often revised downward after a few months. Even that 0.4 percent growth, supposedly the slowest in 10 years, may even be on the high side. On the same day the statistics office made public the first-quarter economic performance, it also announced downward revisions in the economic growth data for the last three years.

Thus, GDP growth was trimmed to 5.3 percent from 5.4 percent in 2006; to 7.1 percent from 7.2 percent in 2007; and to 3.8 percent from 4.6 percent in 2008. GDP growth in the last quarter of last year was first reported at 4.5 percent but slashed to 3.8 percent in the latest estimate. It is reasonable to expect that the 0.4 percent GDP growth figure slashed to negative territory soon.

Professor Philip Medalla commented: “I hate to sound like a broken record, but I have to point out that, given the quality of the data, one should not take NSCB’s estimates of the growth rate of GDP at face value. Real GDP grew by 0.4 percent. But if one factors out the change in the “Statistical Discrepancy” (which would yield the estimate of GDP using the “expenditure approach”), real GDP growth would have been -1.9 percent.”

Another UP economist, Arsenio Balisacan, said the marginal 0.4 percent growth during the first quarter is nothing to be proud of. That growth rate, given the annual population growth of two percent, “means much less income for every Filipino,” Balisacan said. Per capita GDP actually contracted by 1.5 percent, against a 1.9 percent growth in 2008, Balisacan said.

Balisacan said the 0.4 year-on-year growth is only one side of the coin. The seasonally adjusted growth fell 2.3 percent during the quarter, the biggest contraction since the mid-1980s, and leading indicators point to a continued weakness. Seasonally adjusted growth refers to quarter-on-quarter comparison of economic performance, minus seasonal factors such as Christmas holiday spending and the harvest season.

Thus, we have the technocrat, statistics office chief Romulo Virola warning that the economy was “teetering into recession.” What is worrying, according to Virola, is that “the leading economic indicators for the second quarter breached into negative territory, confirming the all-too-real threat of a recession.” Two consecutive quarters of seasonally adjusted contractions means the economy was in a technical recession, which was likely to happen given the dismal figures in the second quarter, Virola said.

Virola is referring to the 11 indicators for the second quarter that include money supply, new businesses, terms of trade index, merchandise imports, tourist arrivals, electricity consumption, the foreign exchange rates, stock prices, inflation, hotel occupancy and wholesale prices. “If this trend continues, we may slip into recession,” Virola said.

On the other hand, we have Ralph Recto, the politician who heads the economic planning agency, saying he doesn’t think so. Recto believes growth in the remaining quarters would be stronger than the first. “I do not expect a recession this year,” he said, noting that the Philippines was one of the few economies that managed to grow in the first quarter despite the global financial meltdown.

Give it up, Ralph! The economy did not manage to grow in the first quarter. It was at standstill at best, and most likely contracted. Stop the pa-pogi approach and deal with the reality at hand. NEDA should instead, lead the effort to mitigate the impact of this crisis on our people. As economist Balisacan puts it: “(This) calls for greater support from both monetary and fiscal policies, though monetary and fiscal management now clearly is more difficult with the policy mix requiring careful evaluation.”

For starters, NEDA should constantly update us on what government is actually doing compared to what the administration itself said it would do. What happened to the supposed stimulus program of government and its chu chu partners at PCCI?

“There is only modest pick-up in public spending according to Q1 national income account data, though slow growth by itself bodes badly for fiscal deficit numbers given the effect on revenues. The slowdown in growth also adds stress to an already weakened debt-to-GDP ratio,” Medalla pointed out.

Even Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the disbursement of public funds was not enough to pump prime the economy. He called on fiscal authorities to ensure that funds are being spent on critical projects for maximum multiplier effects.

Albay Gov Joey Salceda, an economics adviser of Ate Glue, is saying he expects us to slip into mild recession in Q2 because among others, government has not spent as much in terms of stimulus as it said it would. Salceda said the Philippines has technically entered into a recession when GDP drops below the population growth rate of 1.92 percent for two consecutive quarters. Moodys says only a miracle will prevent us from slipping into recession.

Why is the administration not spending as much as it said it would to pump prime the economy? Stimulus spending must be done early and with enough heft for it to be effective in preventing a recession or cutting its duration. Are they waiting for the election season to spend all that money on cha cha and ensure the election of the administration’s favored candidates?

Economic apologists of the administration criticized foreign institutions such as the International Monetary Fund after it projected zero growth for the Philippines this year The Economist Intelligence Unit sees a 1.9-percent contraction.

Kailangang magpakatotoo tayo. If recession is here, we just have to deal with it and not through press releases and media spins.

Political merger

Robin Tong sent his suggestions for the name of the new political party emerging from Lakas and Kampi’s merger.

1. PALAKA—PArtido LAkas KAmpi

2. BAKLA—BAgong Kampi LAkas

3. SALAPI—SAmahan ng LAkas kamPI

Boo Chanco’s e-mail address is bchanco@gmail.com