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FORMER
Rep. Etta Rosales has called for more “participatory,
democratic and people-oriented” economic solutions for
the Philippines to resolve domestic economic problems
and survive the global financial crisis.
At the
same time, she joined the growing clamor for the
Government Service Insurance System (GSIS) to reveal the
true extent of its global investment program (GIP) amid
fears that the money of state workers who are its
members may be in peril from the fallout in the
international financial markets. Now, she said, is the
worst time for any government agency to be making huge
investments overseas.
She
recalled a recent announcement from GSIS about plans to
earmark $400 million of its funds for offshore
investments this year, targeting to generate 8 percent
of its yearly income.
The $400
million is the balance of the $1 billion it intended to
invest in foreign currency-denominated securities, said
Rosales. The first tranche of $600 million, invested
earlier in foreign assets, is being handled by fund
managers. The GSIS originally earmarked 25 percent of
its assets, or $2.5 billion in offshore investments, she
said.
“As they
are putting people’s money at risk, transparency and
accountability must be exacted on public banks,
insurance systems and other financial institutions with
regard to investments,” she said.
A
similar warning was aired over the weekend by former
senator and labor leader Ernesto Herrera, who was also
incredulous at how quickly GSIS officials can assure
members there’s nothing to worry about their pension
fund’s investments having been burned in the crisis that
toppled several of Wall Street’s giant investment banks,
insurance and brokerage houses—without giving specifics
or figures to make a clean accounting to members.
According to Rosales, the decision-making process for
major offshore investments of public funds, including
those managed by GSIS and the Social Security System (SSS),
should be more consultative and participatory, given a
riskier international financial environment.
Likewise, she said the appointment process of GSIS and
SSS heads must be subjected to a more democratic
process. This is to avoid the use of GSIS and SSS for
political and rent-seeking purposes, she explained.
Speaking
at a media forum entitled “The Global Financial Crisis:
Why the worst is still to come for the Philippines,”
Rosales suggested the holding of a people’s summit to
come up with an alternative economy that involves the
people.
In her
presentation entitled “What is to be done? Surviving
Global Financial Crisis, Resolving Domestic Economic
Woes,” Rosales, a leader of the people’s organization
Akbayan, blamed the failed economic paradigm of
neoliberalism—characterized by full privatization,
deregulation, and liberalization—and failed economic
governance, for the country’s weak economy.
She said
the country’s heavy dependence on Business Process
Outsourcing (BPO) and OFW remittances also renders the
economy weaker, amid threats of a pullback of US BPO
companies and rising job losses that may affect OFWs,
leading to less remittances in the future.
In
short, she said there is a weak industrial base in the
Philippine to generate employment.
Her
broad approaches: generate solutions to the country’s
domestic socioeconomic predicaments to, among others,
ease the debt burden, ease poverty, and generate
sustainable employment at home by strengthening domestic
industries.
However,
she said the process for generating solutions to
socioeconomic problems must involve the people.
As a
solution to the global fiscal woes now severely
affecting the US economy, she said there is a need to
resolve the deeply-rooted Philippine debt problem by
reducing debt payments. She said debt service can be
redirected to social and economic expenditures that
benefit the people.
Rosales
said there’s a need to renegotiate debt payment terms
and repudiate illegitimate debts, by reviewing the
securitization of illegitimate debts incurred,
especially during the Marcos era.
She
attributed the “extreme volatility” of the global
financial system to “speculation”, although she said
that the country’s financial system is extremely
liberalized.
“Capital
accounts and foreign currency can go in and out of the
country without restrictions,” she said. She said huge,
risky offshore investments are possible because of this.
The
Philippine Stock Exchange (PSE) and the Philippine
Dealing System Holdings Corp (PDS), the operator of the
country’s electronic currency and debt trading system,
has signed a deal to develop a local derivatives
exchange, hedging currency, stocks, credit and interest
rate exposure.
Rosales
said a previous exchange, the Manila International
Futures Exchange, was shut down by securities regulators
in the 1990s.
Rosales
said there is a need to reverse the financial
liberalization, so as to reverse also its effects.
She said
this can be done by saying no to derivatives exchange;
by strengthening, not weakening, limits on offshore
investments; and imposing more restrictions on capital
and foreign currency ingress and egress, except those of
OFW remittances, and further strengthening and
stabilizing the domestic financial sector by regulating
“hot money.”
This,
she said, can be done by imposing higher reserve
requirements for short-term foreign-denominated loans.
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