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Highlights of the KDC Discussion “Are We on Track? Assessing Economic Reforms and Tackling Inequality to End Poverty”

The Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives (HRep), together with the World Bank (WB), hosted a forum on the topic “Are We on Track? Assessing Economic Reforms and Tackling Inequality to End Poverty”. The event was held under the auspices of the HRep-WB Knowledge for Development Community (KDC) Program on October 18, 2016 at Rooms 1 and 2, Ramon V. Mitra Building, House of Representatives, Quezon City. House Secretary General Cesar Pareja opened the event with his remarks emphasizing the primacy of reducing inequality and fighting poverty under the leadership of both President Rodrigo Duterte and Speaker Pantaleon Avlarez.

Dr. Gabriel Demombynes, Program Leader for Human Development of WB in the Philippines, presented the highlights of the publication "Tackling Inequality to End Poverty: Global Data Update”. His presentation began with a brief explanation of the different thresholds used in determining poverty, including the USD 1.90 used by the WB. He added that the USD 1.90, equivalent to PHP 40, was by no means a perfect benchmark. Dr. Demombynes emphasized that the WB adopts the dual goal of reducing poverty and promoting shared prosperity, that is, narrowing inequality. In particular, addressing income inequality is seen as a strong approach in the fight against extreme poverty.

It was noted there is a declining incidence of extreme poverty worldwide. The Philippines follows this trend, albeit at a slower pace. Profiling reveals that the poor are mostly in the rural areas, engaged in agricultural activities, young, and have little or no education. Dr. Demombynes suggested that countries learn from each other and take note of elements for success, notably good macroeconomic management, well-functioning labor markets, and sustained efforts, among others. Countries can glean from six proven policies, namely, early childhood development and nutrition, universal health care, quality education, conditional cash transfers, rural infrastructure, and progressive taxation.

Undersecretary Roseller Barinaga of the National Anti-Poverty Commission (NAPC) presented the agency’s assessment of the Philippines’s poverty situation based on the recently held National Anti-Poverty Sectoral Summit participated in by over 500 basic sector organizations.  The country’s current poverty situation could be attributed to the following: (1) macro-economic framework of trickle-down economics, (2) unreliable implementation of social reform programs, and (3) hesitancy towards social protection programs.  In particular, the Government’s trade and investment liberalization, deregulation of economic sectors, and privatization of government assets did not produce the expected results.  Instead, foreign direct investments worsened the labor situation; deregulation weakened the agriculture sector, producing an economy that lacks heavy industrial base; while privatization of government assets gave rise to inefficient markets as evidenced by the present traffic problem, and poor infrastructure and public transport system, as well as slow internet.  Proposed measures to address poverty were the following: (1) rebuild the agricultural and industrial sectors; (2) maintain Conditional Cash Transfer (CCT) and match it with sustainable job programs; (3) review current public-private partnership engagements; (4) mobilize school resources; and (5) improve governance through people participation, in particular, by allowing better participation of the poor and focusing on the barangay as the primary locus of development.       

The National Economic and Development Authority (NEDA), through the Assistant Director of the Social Services Staff, Ms. Myrna Clara Asuncion, related the goal of reducing inequality and poverty with the Philippines’ long-term vision called “Ambisyon Natin 2040”. The vision is a set of ideals put forward by Filipinos on the life they aspire to have in 24 years. It is the product of focus group discussions (FGDs) and surveys conducted by NEDA. The long-term picture envisions a Philippines with a “prosperous and predominantly middle-class society where no one is poor”, and where peoples live long and healthy lives, are smart and innovative, and live in a high trust society. This vision is the subject of President Rodrigo Duterte’s Executive Order No. 5, series of 2016. The value of eliminating poverty as one of the highest aspirations of the Filipino people was underscored.

Assuming right policies are put in place, NEDA projects the Philippine Gross National Income (GNI) per capita to increase three-fold, from USD 3,500 in 2015 to USD 11,000 in 2040. At status quo, the indicator is seen to increase by less than double to USD 5,000. For this to be possible, the right policies have to be put in place. Regional growth targeting, consultations with stakeholders, and extending Philippine Statistics Authority (PSA) data to the provincial level are part of the overall approach. With the right reforms, reducing the poverty rate to 0.6 percent is possible, according to NEDA.

Ms. Bernadette B. Balamban, Chief of Poverty and Human Development Statistics at the Philippine Statistics Authority, shared some observations on poverty and related indicators.  The Philippines has been experiencing robust economic growth, particularly from 2010 to 2015, with GDP growth averaging 6 percent. However, this did not translate to significant poverty reduction to achieve the country’s Millennium Development Goals (MDG) target of halving poverty.  In terms of distribution of poverty across the country, concentration of provinces with high poverty incidence is in Mindanao, specifically in ARMM.  Income distribution across the country has also remained poor, as Gini coefficient recorded in 2012 was at 0.4605.

Poverty incidence among families declined from 20.5 percent in 2009 to 19.7 percent in 2012, notwithstanding the 12.2 percent increase in the poverty line in the same period.  On the other hand, mean per capita incomes of the first to third income deciles increased by 13 percent.  This highlights the imperative that while increases in income indicate progress, prices should not rise faster than income in order that price increases do not dilute the gains achieved by increases in income, most especially the prices of basic commodities.  

Mr. Isagani Serrano of Social Watch represented the Civil Society and voiced an alternative view of eliminating poverty. The use of income, especially the USD 1.90 threshold was criticized. “Prosperity without growth” and sustainability by reducing carbon footprint were Mr. Serrano’s main proposals. He admitted that his ideas ran counter to the conventions of economic growth and poverty alleviation using income as basis. Various proxy indicators were put forward such as the amount of organically-grown food, average age of trees, and number of people who vote for candidates they truly trust. Mr. Serrano explained that collecting proxy indicators would redirect attention away from income.

During the Open Forum, Rep. Rosanna Vergara, 2nd District of Nueva Ecija, raised the issue of restrictions in WB-funded projects such as limiting the hiring of consultants to Bank-accredited ones, resulting to inefficiencies and rendering the WB as “anti-poor”. Dr. Demombynes replied that he was not familiar with the WB’s policies concerning Rep. Vergara’s point but he assured her of the WB’s efforts to continuously improve its policies.

Another question from Rep. Mark Go, Lone District of Baguio City, dealt with NEDA’s projections on Ambisyon Natin 2040 and the policy reforms that would accompany the three-fold increase in per capita GNI envisioned by 2040. Rep. Go observed that improving the productivity of people is the most important means to achieve poverty reduction.  He noted that most recommendations are cost-driven, whereas employment and investment have a direct impact on GDP. 

On Ambisyon Natin 2040, Asst. Director Asuncion answered that the assumptions came from a panel of experts. She likewise provided some ideas like the promotion of responsible parenthood and reproductive health. Ms. Asuncion expressed gratitude to Congress for enacting important laws such as the RH Law, Early Childhood Development, and JobStart Program. Mr. Serrano pointed out the central role of population in these discussions.

On the issue of political inequality raised by Director General Romulo Emmanuel Miral, Jr. of the CPBRD, Dr. Demombynes acknowledged that the study lacked this dimension of inequality and acceded that the political and institutional dimensions are significant in understanding poverty. Rep. Joey Salceda from the 2nd District of Albay asked if the World Bank analyzed the structural and spatial aspects of inequality, particularly in the Philippines. Dr. Demombynes replied that he had not delved specifically on the Philippine case. Rep. Salceda discussed further the implications of structural inequality in better targeting programs to areas and populations that need them the most. He underscored the role of innovation in reducing inequality and highlighted the potentials from knowledge-sharing and a fast internet connection.


KDC Development Discussion:

“Are We on Track? Assessing Economic Reforms and

Tackling Inequality to End Poverty

Conference Rooms 1 & 2, Ramon V. Mitra Building
House of Representatives, Batasan Hills, Quezon City
18 October 2016, Tuesday
1:00-4:00 PM
 P R O G R A M M E

1:00-1:15       Registration

1:15-1:45       Opening Program

          Welcome Message
          Hon. Atty. Cesar S. Pareja
          Secretary General
          House of Representatives
          Introduction of Participants
         Forum Overview and Mechanics
1:45-2:15       Main Presentation: "Tackling Inequality to End Poverty: Global Data Update"
                        Mr. Gabriel Demombynes
                        Program Leader for Human Development
              2:15-3:00      Discussants:
         National Anti-Poverty Commission
          Assistant Director – Social Development Staff
         National Economic Development Authority
          Division Chief, Poverty and Human
          Development Statistics
         Philippine Statistics Authority
          Mr. Isagani Serrano
         Social Watch
                    3:00-3:45      Open Forum
                   3:45-4:00      Closing Remarks


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