Friday, November 25, 2011

Grupo58 through the years

This article was written for the Golden Jubilee of Ateneo School Class 58 Yearbook in 2008 by Lamberto Tajonera. For some reason the Yearbook was not completed and this writeup of the bygone days of youth covering this class' years at the Ateneo de Manila never saw publication. It is a very well written chronicle of the the batch's odyssey from the grade school years in Padre Faura amidst the ruins of old Ateneo, through to the high school years in the newly built school buildings in Loyola Heights in the latter part of the fifties then on to collegiate days at the turn of the decade.
After more than half a century the bonds of friendship have endured the test of time and the members have kept in touch with the regular First Friday masses at the St Thomas More chapel in the Ateneo Rockwell. After mass the group would have  fellowship lunches in one of the restaurants at the Power Plant Mall. What keeps the interaction alive is the Group e-mail which serves as a medium for announcements of vital news, significant events of members, jokes and of topics ranging from the sublime to the ridiculous. 
A lot us got to know of this masterfully written piece only recently when one member requested the author to post it. I am reprinting it here because it is a pity that such a well written chronicle of our salad days which is precious to its members may just fade away unshared.


By Lamberto J.V. Tajonera, G.S. 54, H.S. 58, A.B. 62

On December 6, 2008, 100 senior Ateneo alumni went up the stage during the Homecoming and became teen-agers one last time as they sang “Those were the days” with the voice and confidence of youth. Behold, the Golden Boys of 2008.

Our story started sixty years ago, in 1948, when we were the angelic first-graders at the Ateneo Padre Faura campus playing our games amid the ruins haphazardly created by General Macarthur’s erratic young pilots in World War II.

Our story is also the story of the Ateneo Blue Eagles basketball team which reigned supreme in 1953-54, 1957-58, 1962-63 and 2008. They were champions in other years too, but let us just focus on our four milestone years: our graduation from grade school, high school, college, and last December 2008, our golden jubilee year. In those 4 basketball seasons, Grupo58 willed the Eagles to the NCAA and UAAP championships. We were the team’s inspiration. We were the school’s lucky charm. Sin duda.

In those years, Grupo58 went through four stages which we were blissfully unaware of. For sure, there were awakenings and discoveries which happened to us as individuals, as a class and as a generation. We never found the need to articulate those discoveries for the world to know.

We were enjoying our youth too much to bother with posterity. We were young, right? Leave history to the eggheads of the academic world. Living was for the young, the vibrant, the ambitious, the invincibles, the dreamers, the renaissance men, the visionaries, et cetera, et cetera, et cetera.

The Four Ages of Grupo58

1948-1954: The Age of Innocence: “We stand on the hill…

We started our Ateneo education in 1948 as Grade One pupils corralled into two sections, section A under Mr. Florendo Garcia and section B under Mr. Jesus Villanueva.

For the next six years of our lives we would wear khaki pants, white shirts with the “Lux in Domino” patch sewn on our left breast pockets. In our hip pockets were two important items: our rosary beads and 25 centavos which took care of our hot dog sandwich and Coke, or Clicquot Club during recess time. In October, our school uniform included the compulsory October medal.

In our innocence, we believed the Padre Faura ruins were the coolest playground for our fantasies. We fought with John Wayne in Iwo Jima before he was shot and killed. We were cowboys chasing and being chased by Cochise and a horde of Apaches. We helped Errol Flynn rout Blackbeard and his pirates. It wasn’t the ruins. It was our imagination.

We believed that Acme Supermarket was created for our comic-reading pleasure and bubble gum-chewing delight, for free. We would dash to Acme during recess, speed-read the latest Captain Marvel and Superman comics, pocket a Tootsie Roll or Double Bubble gum when the salesclerk wasn’t looking and then dash back to school and brag about our loot. Some would swap a Tootsie Roll for 5 sigays and 10 teks and 5 balimbing marbles. Some would simply sell a Roll for 5 centavos.

We believed that our schoolmates who felt Father Maximo David’s “yantok Mindoro” on their butts were the real tough guys in the Ateneo. As a badge of honor, these “toughies” would walk around massaging their butts even long after the pain had gone.

We believed that Luis “Moro” Lorenzo was the best basketball player in the world as we watched him take practice shots in the sawali-walled gym. We would look in awe as Poch Estella, Oli Orbeta, Rusty Cacho and Chole Gaston scrimmaged.

We believed everything taught us in religion class and pitied our Chinese classmates who would never go to heaven because we thought they were not Catholic.

In those days, life was simple. We saw life as either black or white, mortal sin or sanctifying grace, good or bad, angel or devil. Our eyesight was a perfect 20/20, and sharp. We believed our eyesight would never dim with age because we would be forever young.

We were also sure that the 1953-54 Blue Eagles of Tiny Literal, Bay Ballesteros and Frankie Rabat would win the NCAA championship and beat the San Beda Red Lions of Caloy Loyzaga and Loreto Carbonnel. And our guys won - because our nightly prayers and weekly masses did it. Our basic belief: Ateneo had to win or God did not love us.

Black and white. We never saw the other tones, the subtle shades of gray. After all, we were young, and young meant pure of heart. We were uncompromising. We were resolute. And by golly, we were more zealous than Saul of Tarsus. We were virtuous and innocent, euphemisms for naïve and inexperienced. So what. That was our right.

We possessed a moral certainty and smugness still unblemished, untouched and untried by the sorrows and ugliness of the real world. We were above it all. We were standing on the hill. We were the last grade school graduating class in the Padre Faura campus in 1954, and we were ready to go down, nay, to gallop and romp down the hill like Hopalong Cassidy and the Lone Ranger to combat the challenges and unknowns of our high school years. And we did.

1954-1958: The Age of Discovery: “…between the earth and sky…”

1958. It was the year we graduated from high school. That made us the last high school graduates of the Ateneo’s first century. Those four years of our lives opened our eyes to God’s most exquisitely inspired creation, girls our age. Our eyes opened wider in wonderment when we were told by our Student Counselors that we were going through a phase called puberty.

We were like Adam and Eve when they discovered --- first the apple, then each other, then the pleasurable knowledge of each other and finally, the necessity for the fig leaves. Like Adam and Eve, we never knew what puberty was. We just felt it. And many of us acted on it with alacrity and pleasure.

Our first two years in high school were spent in today’s College campus where we had a clear view of Katipunan Avenue, the Pink House, Eagle’s Nest and St. Joseph’s Hall. No buildings obstructed our view then. In our junior year, we transferred to the high school campus overlooking Marikina Valley and the rooftops of bawdy houses in Calumpang.

In our first and second years, we learned our Latin declensions and conjugations as we chanted the mantra of “a ae ae am a, ae arum is as is” and then struggled through Caesar’s Gallic battles. In junior and senior years, we went on to Cicero and even now, we still remember “Quo usque tandem abutere Catilina patientia nostra…” The more advanced guys in honors class were into Virgil’s “Arma virumque cano Trojae  We hated this dead language then, but Latin in later years helped us in logical thinking and expanded our English vocabulary.

As a part of our memory trove of those days, this is what our parents spent for our 4th year in high school (1958):
Annual tuition – P 300.00
Laboratory Fees – 40.00
Diploma Fee – 10.00
Textbook Rental – 25.00
Activities Fee – 40.00
Blue Book – 15.00
Locker Fee – 5.00
Total expenses for the year – P 435.00

Our children will be crying over their latte when they compare 435-pesos with 100,000 pesos for our grandchildren’s high school education, with no Latin.

We were between two worlds – the world of grade school child-like innocence where swiping a wad of bubble gum from Acme Supermarket was the acme of adventure, and the world of high school “sophistication” and experimentation - girls, smoking, drinking, first dance, first kiss, fake sideburns, low-waist pants, blue movies, live shows.

For teachers and mentors, we had Mr. Dimasangal and his memorable “Que mas, balasubas?” and laughed at Mr. Alinea’s Tampolano stories, and oohed at Mr. Pagsanghan’s dramatic reading of Father de la Costa’s “Jewels of the Pauper” which everybody had to memorize.

Mr. Ocampo, a.k.a. GRO, implanted in our brains his own jewels of knowledge which many of us still remember, Alzheimer’s or old age notwithstanding. We still remember GRO jewels like: easy to remember memory aid on the 11 phyla in Biology class – PP-CC-PN-AAMEC,  and M VEM J SUN P for the planets of our solar system in correct sequence, and his classic Tagalog pronunciation of the alphabet as in the rhythmic “Ka In Na, Ta In Na, Kintin,” and “Ba O, Ta E – bote.”    

We were James Dean and Sal Mineo, rebels without a cause, but rebels anyway. For that, many had to have red jackets and started to smoke. Beer was not the drink of choice. Rum-Coke was.

We felt pious and sinful at the same time. We always had an unexplained tingle in our bodies whenever we saw photos of Rita Hayworth, Kim Novak and Marilyn Monroe showing more skin than clothes. We’d go ape over Rhonda Fleming’s exposed thighs.

At night we entertained dozens of excitingly impure thoughts until our Catholic conscience made us feel guilty. We knew confession was the only way to avoid hell. So with the exception of Grupo58’s sodalists and acolytes, 95% of us confessed to either Father Eliazo or Father Pollock, and these two Jesuits, in their wisdom, always saved us from hell with a penance of three Hail Marys, no matter how often we disobeyed the sixth commandment.

The bargain-priced penance would never be enjoyed by non-Ateneans of our days, making Grupo58 a lucky bunch of habitual sinners indeed. This would go on week after week, a spiritual cycle of Passion, Death and Resurrection, sin and forgiveness, hell and heaven, impure thoughts and confession, the two beloved Jesuits and their penance of three Hail Marys and voila, salvation. Alleluia.

In the athletic world, the 1957-58 Blue Eagles, led by Bobby Littaua, Jimmy Pestano and Ed Ocampo, steamrolled all the NCAA teams and made mincemeat of the Mapua Cardinals in the final game to nail that year’s NCAA championship. We even believed that our graduation years were Ateneo’s lucky years in basketball. First it was 1954, now 1958. Our college graduation year in 1962 was sure to bring us the championship. That, we firmly believed. So, it shall be done.

If researchers were to poll Grupo58 on our happiest years, 1954 to 1958 will be it. Those were the years of firsts: our first visit to a girl’s house, our first dance with a girl who is not our sister or cousin, our first kiss, our first Saturday night outing to Marina’s and Emong’s, our first beach night party at El Faro, our first weekly Saturday afternoon visit to our favorite therapists in Misericordia and Tetuan, our first cigarette, our first bottle of beer. And yes, Rum-Coke.

Those were also the years of many lasts: the last grade school class in Padre Faura before the transfer to Loyola, the last grade school class without a grade seven, the last high school graduating class of Ateneo’s first 100 years, and the last golden jubilee class of the Ateneo’s first 150 years.

If it is true that good guys always finish last, it is also true that life always serves the best for last. Take a bow, Grupo58, because the world has not heard the last of our braggadocio.

In those happy-go-lucky high school years, we were caught between the eternal struggle of the sixth commandment against our raging hormones, between boyhood and manhood, between the sublime and the ridiculous, between Don Quixote’s mud below and the unreachable star up above. We stood tall, between the earth and sky.

1958-1962: The Age of Exploration: “…cast your shadow below, swoop down on the foe, and sweep up the field away…”

Our college years separated the men from the boys, the jokers from the scholars, the jocks from the geeks, the lover boys from the altar boys.

But all were one in this goal: finish college, please our parents and start our real lives. Patience was not a desirable virtue. We were in a hurry to challenge the world on its terms. We were getting ready for that battle. Matira ang matibay.

Like business institutions and icons, Grupo58 was always on the verge of many things. We were on the threshold of manhood. Our voices were now deeper. We were getting more confident. We were feeling wiser and smarter.

With a lot of philosophy theorems, knowledge of many stuff and plain ingenuity, we were testing our powers, with mixed results.

Our college years were the best years for experimentation. And we had the cojones to just do it.

Thus the audacious final exam leakage project in 1962 was conceived and implemented successfully. The guys who got the leaked tests aced their written exams and had all the time to prepare for their more difficult Philosophy orals.

Thus our logic and eloquence would almost seduce a handful of the pretty but pleasantly naive colegialas, but only for bragging rights.

Thus the 1961-62 Blue Eagles, led by our classmates Dodo Martelino and Boogie Pamintuan brought home the NCAA championship. We expected the championship that year. We clearly saw it in the stars. We never doubted that. We inspired the Blue Eagles to the heights of college basketball. We felt we were ready for the world. We were unafraid. We were invincible. Yes?

1962 Onwards: The Age of Contentment: “…our course is run, and the setting sun ends Ateneo’s day…”

“Down from the hill, down to the world go I…”  And so in 1962 we bade each other adieu and went our separate ways, following our own drummer and seeking our fortune. We would be lawyers, doctors, actors, advertising people, business executives, government officials, soap and drug salesmen, teachers and professors, hacienderos, politicians, bankers and for the most part, lovers, husbands and fathers.

Raising a family and building a career in those post-1962 years ate up a lot of our time and energy. Both demanded more from us. It was growth in a human sense. We juggled the demands of both, hoping we would achieve an optimal balance between home and the office. Success or failure would be felt later, in our twilight years when we look back at years past, either fondly or sadly.

Many will recognize and accept their levels of contentment in their twilight years. Some would still search for something better, and sadly, would settle for less in the end. Such is life. Such is the world. Ayun yon e.

 “…remembering still how the bright blue eagles fly…” The values and principles deeply breathed into our souls would be our constant guide as we went through life.

We would often reach a point when we had to choose between the honorable and the gross. Sometimes we chose right. Sometimes we rationalized. For sure, we know that the bright blue eagles of our values and principles will always be up there somewhere, reminding us, reminding us, reminding us.

“…win or lose, it’s the school we choose, this is the place where we belong.” No matter what choices we made, how life turned out for us, we knew we would have no regrets. When family is gone, leaving an empty nest, and when the business is now in the hands of someone else, we know we still have one place of refuge - our alma mater.

Our memories of classmates are embedded in our school’s walls and corridors.

Last December 6, 2008, with the pleasant memory of the Blue Eagles thrashing La Salle in the 2008 UAAP finals, we returned to the place where we belong and hungrily sought the company of school chums to laugh, chat and shamelessly embellish stories about those carefree days. Reminiscing is simply priceless. Those moments will always be our golden memories. And on that Jubilee Night, before the other alumni, Grupo58 lustily sang: Those were the days, my friend, we thought would never end…”

Thursday, November 24, 2011

A Discussion on Corruption and the Philippine Economy

Corruption has been topical of late because of the ongoing furor between the Supreme Court and the Department of Justice. Principal protagonists are Gloria Arroyo and Mike Arroyo pitted against a feisty Justice Secretary Leila de Lima. It seems that Pnoy’s mission of eradicating corruption is well on its way with the filing of charges against Gloria and other co accused in the electoral fraud of 2009 and with a number of plunder cases waiting to be docketed in the Sandigan Bayan.
Pnoy has been criticized for being too focused on his eradication mission to the exclusion of other important concerns such as public policies pertaining to infrastructures, health, law and order, food security, poverty alleviation, the economy and others which may be lagging behind because they have taken a backseat to the drive against corruption.
As before important issues have been discussed among the members of our email group giving everyone better insights from the varied opinions of our members.
What follows is the thread of e-mails which got started when Subas Herrero posted an article regarding the favourable economic climate in the Philippines writtem by Mark Matthews, head of Research Asia at the Julius Baer Bank.
It was a fruitful learning experience for me to have been in conversation through e-mail with two eminent economists, Rufo Colayco and Victor Barrios (both members of Grupo58) with me as the layman of the group posing questions and opinions some naive and some bordering the ludicrous.  They have patiently persevered with me and came up elucidations that I found educational. I hope that the reader will be appreciative of them as I was.

*On Mon, Nov 21, 2011 at 4:55 AM, Ricardo Herrero <> wrote:

This email came into my mailbox. It looks like good news for the country!! What say our economists? Vic B.? Rufo C.?

Pray. Hope and Don't Worry!!! - St. Pio OF Pietrelcina
This is very GOOD NEWS!
I particularly like this part: 

"Last year, for the first time in history, the Philippines' gross international reserves eclipsed its external debt level, making it a "creditor" nation, according to a report by Bank Julius Baer."

Let's pay off our foreign debt na! Hehehe. (SIDENOTE: In theory, we can pay off the $56 b in foreign debt with the expected $76 b and still have change to pay for our monthly imports.)

Invest in Philippines, the 'Dark Horse' of Asia: Expert
On Friday 18 November 2011, 8:26 SGT
As far as emerging markets go, the Philippines is seldom the choice investment destination, but one analyst says the Southeast Asian nation could well become the "dark horse" of the region, thanks to its favorable demographics and sound economic fundamentals.
The Philippine's "very robust and young population" presents a ready pool of talent, says Mark Matthews, Head of Research Asia at Bank Julius Baer. He expects the country's population of 93 million, around half of whom are below 20 years old, to more than double to 190 million by 2040.
With fertility rates declining in the West and in Asian countries like Japan, Korea and China, the Philippines will increasingly become an important source of immigrant labor, he added.
"And the interesting thing is 80 percent of them speak English," Matthews said. "Most people who speak English in third world countries, they don't want to go overseas to work in sort of manual labor. But the Filipinos have no problem doing it...and they are making three times as much as they are making back at home, and they are sending it back home."
The Philippines is already one of the world's biggest recipients of remittances - the fourth biggest in 2010 according to the World Bank - which account for a tenth of the country's gross national product. According to the country's central bank, monthly remittances hit a record high of $1.7 billion in September with total remittances for the year expected at $20 billion.
The country remains in an enviable position fiscal-wise. Last year, for the first time in history, the Philippines' gross international reserves eclipsed its external debt level, making it a "creditor" nation, according to a report by Bank Julius Baer. The country is expected to end the year with a record $76 billion in foreign reserves, which is part of the reason why ratings agency Fitch upgraded the country's credit rating to BB+ from BB in June, just one notch below investment grade and on par with Indonesia.
And with a debt-to-GDP ratio among the lowest in Asia at under 50 percent, the Philippines is one of the most under-geared countries in the world, which makes it a less risky bet for investors. "That means it will no longer be 'another domino' in times of crisis," the Bank Julius Baer noted.
Despite being one of the best performing stock markets in Asia this year, with gains of over 3 percent, compared to double-digit percentage losses in China, Japan and Singapore," Bank Julius Baer says the market is still attractive on a valuation basis.
"The market is not expensive on 14.5x 2011 and 12.5x 2012 P/E, versus an average over the past 15 years of 12.5x," the bank noted.
The bank is not alone in its bullish view of the Philippines. A recent survey by Bank of America-Merrill Lynch showed fund managers increasing their overweight position in the country, making it the third most preferred market, trailing China and Indonesia.

*From: Victor S. Barrios <>
Sent: Monday, 21 November 2011, 13:25
Subject: Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert

 Yes, my good friend, Subas -- the Philippines has a great potential.

Translating potential to reality requires a number of government initiatives, inter alia:

1. enhancing the "enabling environment" that promotes investments, e.g.:

a. significantly trimming public bureaucracy -- which is a source of delays, corruption and high business costs;

b. liberalizing ownership restrictions in Constitutionally-limited areas;

c. continuing to dismantling hurdles to market entry;

d. leveling the playing field in various business areas;

d. hastening infrastructure development, with high private sector participation; 

e. upgrading technical education and training -- to sharpen and broaden the pool of technical talent for business enterprises;

2. upholding the sanctity of government contracts:

a. rectify the negative implications of the (arbitrary in the minds of many) cancellation of government contracts with foreign groups [I was the victim of two such cancellations instigated by politically-connected groups];

b. respecting the sanctity of contracts entered into in good faith with foreign groups.

*From: Rufo Colayco <>
To: "" <>
Sent: Monday, November 21, 2011 12:36 AM
Subject: Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert
Well there you go Subas, a reply from Vic that's as comprehensive as you'll get anywhere. 

I had responded to this article before, pointing out that what the writer says is mainly that one can make money in the Philippine stock market. Direct investments are another matter, as Vic very well says.

Rufo Colayco

*On Tue, Nov 22, 2011 at 1:53 PM, ed roa <> wrote:

I can't agree more with Vic on his list of requirements for the Philippines to make a reality out of the tremendous potential it exhibits in the region for investments. The endorsements come from unbiased sources like Mark Matthews, Head of Research Asia at Bank Julius Baer and the fund managers of  Bank of America-Merrill Lynch.
Going through the list generated by Vic most of them would be hamstrung by the ineptness and corruption in the bureaucracy, in politics/legislature, in the vested interest groups (both ruling families and consortia) in business and industry and the ruling executive group (the president and the persons who make up his official family).
What gives me optimism is that Pnoy, whose honesty is unassailable (thus far), has as his priority the eradication of corruption and it is off to a good start with the effort at the prosecution of the grafters in the previous administration. Much depends on the success of these efforts to show to those would-be cheaters and corruptors that this administration will see through determinedly this mission.
The Philippines has always been thought of as a country with decided advantages over our neighbors when it comes to potential but it never moved from being such because of the pervasive corruption that make potential investors leave in disgust after their initial attempts to do business.
Ed R

*Subject: Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert
Sent: Tuesday, 22 November 2011, 21:03

Ed, as noted by Rufo, the endorsements by portfolio managers are for secondary, not primary, investments -- which have no effect on GDP/welfare.

The drive against corruption is a desirable element. However, it is neither a necessary nor a sufficient condition to catapult the country to an 8-10% growth trajectory.

Nonetheless, anti-corruption moves should run parallel to responsive public policy in the areas I earlier identified. An effective anti-corruption program will not put the country on the road to prosperity. 

Public policy should not take a back seat. We yet have to see the Administration's focus on growth-oriented policies. 


*On Wed, Nov 23, 2011 at 7:32 AM, ed roa <> wrote:

I am likening the Philippine situation to that of a heavily weeded rich and fertile patch. Pnoy’s approach is to ready the patch by weeding out the unwanted elements and cultivating the environment before he starts seeding and building.
It is not arguable that there should be a responsive public policy running alongside the anti-corruption drive and this, by itself, will not ensure economic progress. However, I take exception to your point about the eradication of corruption as not being a sufficient and necessary condition to catapult the country to economic progress. With corruption nothing else grows, it is the weed that strangles all the efforts to do good for this country. The fight against corruption is an augean task as we are finding out now. The other side is a formidable foe with bottomless resources and will require much time and effort to subdue. The problem has been ensconced in our system for several generations; perhaps we should have more patience now that it seems we are capable of winning and we are beginning to believe that we can win.

*From: Victor S. Barrios <>
Sent: Wednesday, November 23, 2011 9:35 PM
Subject: Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert
My dear friend, Ed.

I was expecting a thoughtful rejoinder from you.

Thank you for the opportunity of explaining the empirical basis for my statement that an anti-corruption drive is desirable, but not a necessary or sufficient condition to catapult the country to an 8-10% growth trajectory. I laud PNoy’s efforts, but let us look at reality.

Let us define Gross Domestic Product (GDP) as the sum of expenditures of all economic units of a country. The table below shows the components of Philippine GDP and their relative importance:

Complete Name
Est. % to Total GDP
Personal Consumption Expenditures
Government Expenditures
Exports Minus Imports


We have a consumer-driven economy, largely fueled by expenditures funded by foreign remittances from global Filipinos. The high ratio of 75% of GDP shows the overwhelming importance of personal consumption expenditures. For personal consumption expenditures to continue growing -- and the economy correspondingly growing as a consequence -- the country has to send workers abroad year in and year out. This policy is not exactly what we wish to accomplish, but nonetheless a driving force – hopefully, temporary.

Investments (in real terms—not stock market investments) have been a languishing component of GDP. The ratio, which is currently about 15%, has been consistently dropping from a high of 30% years ago.

The excess of exports over imports has typically been negative, given the import orientation of the economy. We keep the trade balance at zero level.

The dynamic sources of GDP growth should be investments and exports.

There is universal conviction that government expenditures should not be a major source of GDP growth. We place the ratio of government expenditures to GDP at 10%.

Government capital expenditures, which are usually the locus on corruption in terms of overpricing, account about 10% of total government expenditures or 1% of GDP. Assuming a 30% overpricing, a figure that many contractors cite, the consequent leakage in GDP is 0.3%. In other words, the cost of overpricing in capital purchases is only in the order of 0.3% of GDP. The elimination of a 0.3% leakage will not bring us to the 8-10% growth curve.

If corruption is zero (which is impossible) --  in other words “kung walang corrupt” – the GDP would still be low. In other words, the country would still be wallowing in poverty.

Ergo, corruption, in the context of the Philippines, is not a necessary or sufficient condition to lift the country out of poverty.

Enlightened public policy that would energize investments and exports, alongside the sustainable growth in personal consumption expenditures, would bring the country to the rapid growth trajectory.

Corruption is not a crippling element in strong emerging countries. My development work has included a number of the BRIC countries where corruption is a way of life.  Thailand, our “twin” ASEAN country, has a high level of corruption, but its public policy and initiatives have enabled it to have a vibrant export sector and GDP performance far exceeding the Philippine record.


*From: Rufo Colayco <>
To: "" <>
Sent: Wednesday, 23 November 2011, 23:35
Subject: Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert

Hi Vic, you and Ed are in agreement that the eradication of corruption will not by itself turn the country around.  Where you differ is the extent to which corruption hinders growth.  It looms larger in Ed's eyes than it does to yours.

Your numbers do hang together, as far as that goes.  That is, "Government capital expenditures (principal locus of corruption) = 1% of GDP; over-pricing generally 30% of budgeted capital expenditures (same figure I believe to be currently prevalent).  Therefore, corruption accounts for 0.3% of GDP.

It may be a mistake for us to assume that corruption elsewhere in the system is minor in relation to over-pricing on capital expenditures.  If I understand DJ de Jesus correctly, there's equally rampant over-pricing in the DepEd's purchases of stuff like school supplies; ditto for other branches of Government.  And what about all that pork (P200m/year for Senators, P70m/year for House Reps)?  Has there ever been an accounting of how much of that actually gets spent on either capital or non-capital expenditures on behalf of the the public?  In percentage terms, the leakage there may be even worse than the 30% in places like the DPWH.  I don't have figures, so even after taking all that into consideration, the direct impact on GDP may not be much larger than 0.3%.

Where endemic corruption (which is what we've had for quite some time), as Ed is wont to say chokes growth to death is that it is a major reason why government officials don't think better than they do about what policies will work for growth.  What I observed during my brief time in government was that too many officials MOSTLY THINK OF HOW TO MAKE A BUCK, and almost never really think about what would generate investments and  employment.  I recall how in 2008-9, when I heard about the MRT getting de-privatized, I immediately suspected that there was something not right about the whole deal.  It's only recently when Leo Alejandrino unravelled the Ongpin shenanigans that my fears were concerned.

So how is it that Indonesia, where over-pricing of capital expenditures is evidently as common as it is here, appears to be on a better growth trajectory than we are?  Could it be that there, they first figure out what infrastructure is needed to help mobilize private sector capital then apply the customary overprice?  I can see how that would produce better results than we have, if in fact (as I'm led to believe by what I've seen) our politicians are primarily focused on what projects will generate that bulge in their pockets, rather on what their respective bailiwicks really need? 

FROM: ed roa

Thursday, 24 November 2011, 6:35

Vic, Rufo:
To calculate the effect of corruption on the basis of current values (or what it devalues) might not be quite correct since effect of reduced corruption will have positive influence on a wide range of other components in our economic make-up. With the reduction of corruption other variables are introduced into the equation and even the existing variables would change creating different synergies. It gains momentum, becoming stronger progressively at each turn, a snowball as it were.

Curtailing corruption will not yield economic progress by itself, it has to go alongside responsive public policies in areas (as you have listed) that need to be bolstered or improved upon, but neither of the two can go it alone. Our being a laggard economy compared to our neighbors may be traced to our inability to attract primary investments because of the unattractive business atmosphere we have had for so long. Other countries, Indonesia as mentioned by Rufo, have had their share of corruption but by the index standards set by those who rate we have been grouped among the worst and the poorest of countries. There seems to be a correlation between the level of corruption in a country with its economic standing.

My initial disagreement was when it was mentioned that this was just an attractive prospect for secondary investments. I don’t think Rufo meant it to be mutually exclusive; it’s only good for secondary investments and not for primary investments. The article points out that our economy is rife with opportunities for secondary investors to jump on the opportunities to buy into the existing issues in the stock market, but, the way the endorsers depict the Philippines, it really makes a strong case for both secondary as well as primary investments. A favourable demographic makeup (young population) and a fertility rate that ensures that this will be sustained, English speaking, an enviable fiscal situation, a positive credit rating, stable because of healthy foreign reserves, lowest GDP to debt ratio in Asia and favorable p/e ratios of traded businesses  are qualities of investment climates which investors in the stock market as well as for those opening up new businesses, establishment of production centers and creation of operating hubs in the region find attractive. There are, as you listed, imperatives that we have to work on to encourage new businesses to be invested in the Philippines. In all of these requirements, what seems to be impeding any effort to correct the situation is the endemic graft and corruption, the horn effect of which cannot be exaggerated enough.
Any effort to improve the Philippine economy and the Filipino’s lot has got to first decapitate the many heads of the Hydra. A few heads must roll if we are to kill the evil body that revives and sustains them.
Ed R

From: Victor S. Barrios <>
Sent: Thursday, 24 November 2011, 18:53
Subject: Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert
Hi, Rufo & Ed.

Thanks for your additional insights on the national issue of corruption, poverty and progress.


1.      Administrative Order No. 17 dated 7.28.11 requires the use of the government-wide Philippine Government Electronic Procurement System (Philgeps) for the procurement of common items, e.g., bind paper, ball pens, pencils and pens. The measure could drastically reduce corruption in this area.
2.       Activities such as the publication of all bid opportunities, notices, awards and contracts should also be coursed through Philgeps.
3.       Yes, upping the social rate of return for pork barrel projects is a challenge for legislators.
4.       Strategic Infrastructure build-up has externalities, beneficial to producers, which are repetitive over the years.
1.      You are right that, in a dynamic world, other variables change when a specific variable is changed.  A reduction in corruption would increase GDP to the extent that the resources saved could be reallocated to productive use. Those reallocated expenditures will have a multiplier effect on income in one or more rounds. By the same token, all other GDP expenditure items (C+I+X), and G minus corruption -- all accounting for, say, 99.7% of GDP -- would also have multiplier effects. The income effect of reallocated corruption funds would have no multiplier effect superior to the other components of GDP.
2.      The field infested with corruption weeds is a small fraction of GDP: 10% (share of G in GDP) of 10% capital expenditures = 1%.
3.       I respect your views, Ed, but progress can proceed side by side with corruption – while condemning it, at the same time recognizing it as given.
4.      National leadership should focus on growth-oriented public policy and initiatives, where the payoff is far greater than the welfare effect of reducing corruption. PNoy should not waste time trying to find a needle in a haystack. He should devote his energies, so to speak, on feeding the horses with the hay.
      Ed, as Rufo said, we agree that corruption should be avoided but we differ in our assessment of the impact of corruption. I simply shared my views as an economist.

Re: [AteneoGrupo58] Invest in Philippines, the 'Dark Horse' of Asia: Expert

FROM: ed roa
Thursday, 24 November 2011, 19:36
Vic, Rufo:
Being the non economist in this exchange I feel that I have benefited the most in terms of insights and knowledge in your realm of expertise.

Maraming Salamat
Ed R