Peso will appreciate against the dollar till May 2010

The peso is set to appreciate significantly against the US dollar in the next few months. In August, it was hovering almost around Php 49: 1 US$; but slowly, it has gained strength to its present 47.50: 1. But this is just the beginning, the peso will steadily climb in value  from now till at least May 2010.

Remittances
The recent disaster that struck Manila will cause an increase in inward remittances in the coming weeks,  as Overseas Filipinos send money to their relatives who were affected by the flood. And this will be on top of the remittances that are set to come in to pay for school expenses – final exams are coming, and then this will be followed by tuition fees, etc. By the time this wave of remittances are over, there will then be the Christmas surge in remittances.

This surge of remittances is likely to cause the peso to strengthen against the dollar. The school and Christmas surges were expected, but the “Ondoy” relief remittance surge will be an additional factor to strengthen the peso. And in addition, we could expect the national elections in May 2010 to further increase the inflow of money from abroad. This happens every time there is an election, especially during national elections. It seems that money kept abroad by politicians, and by businesses,  is tapped for campaign expenses.

Weaker Dollar
The US dollar is getting weaker. It has weakened against most major currencies, and this is likely to worsen by the end of the year. In addition to the overall lowering of confidence in the dollar, we need to factor in the actions of Central Banks throughout the world. They are likely to lower the percentage of dollars they keep as foreign exchange reserves by the start of 2010. It is but proper that they do so, with the decreased trade with the US and the expectation that the US dollar will weaken.

If the dollar decreases in value against major currencies, it will also decrease in value against the peso.  One factor is the exchange rate effect on remittances – OFs outside the US will remit the same amount in their own currency, but this will result in more dollars/pesos received by their beneficiaries. Similar mechanisms affect trade, investments, and other monetary flows.

Portfolio Investments
The recent disaster will result in a lot of Filipinos drawing down their savings. At the same time, insurance companies need to liquidate a big part of their reserves in order to be able to pay all those who incurred damages during the flood. All these withdrawals of money will tighten the supply of money, and increase interest rates on loans, bonds, money market placements etc. International money managers will take note of this, and bring their funds into the country to take advantage of the widened interest rate differential.  We would note this as an increase in “portfolio investments” by foreigners.  This will add to the already increased net inflow of money into the country, and the resulting appreciation of the peso.

All these will mean a significant strengthening of the peso vis-a-vis the dollar, at least in the period till May 2010. What happens later will depend on the state of the world economy and the Philippine economy by then.

Children’s schoolbags should be lighter

Pampanga Rep. Carmelo Lazatin has filed a bill seeking to limit the size and weight of textbooks schoolchildren need to carry.  This bill, he hopes, would end the practice of small children carrying very heavy bags to school.  The bill calls on the Department of Education to consider the size and weight of books before approving them, and schools to provide lockers to students/pupils so that they could leave books at school instead of bringing them home every time, only to haul them all back to school the next day.

I think Lazatin’s bill will be a good first step in reducing the weight of schoolbags. However, it does not go far enough.  There is a whole system that needs to be changed to really make it light for students.  For example, I know of a case when the school encouraged students to leave their books in lockers at school, only to back down when parents complained that they paid for expensive books, but they don’t get to see them at home.

And it has a lot to do with the practice of doing homework. In the Philippines, teachers regularly give homework to even the youngest children. The children often need to have their books on hand to do this. But why should very young children have homework? In the Netherlands, where I live, children only start having homework at about Grade 6, and not even every day. I don’t think the children here end up being less smart as a result.  Children in the Philippines spend a lot of time in school, why don’t they allot study periods when they could do their reading and  other extra assignments while still at school. That way, their books don’t need to be brought home, and when the children go home they don’t need to think of school.

Perhaps the heavy schoolbags symbolize  how heavy primary education is for the children in the Philippines.  I feel that primary education should be lighter, more fun, designed with the purpose of making children want to learn, want to find out things, want to interact with people.  We don’t need to cram them with facts, but inculcate them with the habit of finding out, seeking facts. And when they are in high school, they can put these to good use to learn the whole range of subjects.
This is not an idealistic idea… it is what my children went through in the Netherlands.  In the elementary school they learn first just reading, writing, and some arithmetic. History, social studies, even English come only in Grade 5, and homework is done only in Grade 6 (in preparation for highschool, when they will have loads of homework).  It can be done.

Electric cars will dominate road in a few years

There is a lot of talk about electric cars these days, but many people believe that the whole thing would blow away once the oil price goes down, or the crisis is over. Government leaders in the US and elsewhere sound as if they have high expectations of electric cars, especially when it comes to reducing greenhouse gas emissions. But, when it comes to concrete policies, or their projections, they are quite modest (realistic?).

Well, I don’t agree with such modesty. I think that the electric car “revolution” will radically change transportation, and make a major contribution to reducing greenhouse gas emissions. Going even further, I would say that by 2020,  up to 80% of new cars sold outside the US would either by hybrid or electric. (the US is generally more wasteful than other countries, so perhaps only 30% would be hybrid or electric there by 2020)

High Oil Price
The price of oil and oil products is bound to go higher in the future. Right now, while we are in the midst of a deep recession, the price of oil is able to maintain itself at more than US$ 70/barrel. While this may be low when it is compared to the US$ 140/barrel it achieved last year, this is still quite high historically. And after the recession is over, the price is sure to go up again, most probably beyond the highs of last year.

With the high price of oil, many people will opt for cars that either use a lot less oil, or even no oil at all. Thus, the choice will go more and more for either hybrids or plug-in electric cars.

Pollution Control
The world is more conscious of global warming, and many countries are taking steps to lessen their greenhouse gas emissions. This will mean stricter rules for CO2 emissions. There would also be more measures taken by cities to reduce other emissions, from other gases to fine particles, and even the level of noise produced.  All these would be good for electric cars, which do not produce these kinds of pollution.  Of course, this would mean that the pollution is transferred to where the power is produced e.g. power plants; but these are either easier to control or are outside the city. At the same time, there should be some increase in alternative energy sources for electricity to partially compensate for the increase in electricity demand.

Technological Breakthroughs
Although there are still technical problems connected with electric cars e.g. the limited range a car can go on a full charge, these are most likely to be solved in the next couple of years.  In addition, competition will drive technical innovations, resulting in cars which are competitively priced and easy to use.  When this happens, why would people choose the old-style internal combustion engine cars when the new electric cars gives a better performance at the same price?

These factors, taken together, would make it almost ridiculous not to by either a hybrid or an electric vehicle by 2020.

Needed: Laws to Protect Domestic Workers in the Philippines

Many households in the Philippines employ domestic helpers.  They are almost indispensable in a middle class family home. But despite their many contributions to society, Filipinos do not appreciate them fully.

It is important for Philippine society as a whole that the  domestic workers are treated well.  It goes beyond decency, you could see their situation as a labor issue, a developmental issue, and a human rights issue.

Labor issue
Domestic workers are one big unorganized mass of workers. Many people don’t  think of their domestics as workers. But in reality, these domestics work hard, and they are not fully protected by Philippine law. They often work without contracts, do not have social security or medical coverage, and work long hours. Many of them are under the age of 18, and thus are children.

While we may say that there are many workers also with similar conditions, the difference with domestics is that they are not really recognized as workers in our labor laws, and there are no rules or guidelines on how they should be treated or compensated.  The continued nonrecognition of domestic work as regular work undermines the whole structure of labor laws, since there is one big and glaring exception or loophole in it.

Development issue
Domestic workers make up a significant part of the country’s economy. Their main contribution is that they free middle class women to be able to pursue their careers.  Then, they  send back part of their pay to their families, helping to sustain their families in the rural areas.  And domestic work can be seen as a possible transition to urban life, and more formal work.

If the “under-18″ domestic workers are given a chance to pursue their studies, then they would have a chance to get good paying jobs after their stint as domestic workers. While studying reduces the number of hours that they can do domestic work; this is more than compensated by the higher quality of the worker.

Human rights
There are also human rights issues concerning domestic workers.  The first of this would be the right of domestic workers to “rest and leisure, including reasonable limitation of working hours and periodic holidays with pay” (International Declaration of Human Rights, IDHR, No. 24).  There are as yet no clear guidelines on the work/rest hours for domestics.

And then, there are the rights of the child (International Convention on the Rights of the Child) with states that the child has the right to education. Child domestics (i.e. younger than 18 years old) have the right to go to school, and that their domestic work scheduled should be adjusted accordingly,without being too long as a result (since they also have the right to rest and leisure).

First Steps
As a first step towards addressing the labor, development and human rights issues connected with domestic workers, there needs to be a clear legal framework for this.  What is need is a Magna Carta for Domestic Workers, or “Batas Kasambahay” (Kasambahay = domestic workers).  Bills to this effect have been filed  in the House of Representatives and the Senate, but it has mainly been successful in the House. There is a nationwide signature campaign urging Congress (especially the Senate) to pass the Batas Kasambahay.

Since 2005, a number of local governments have passed local ordinances to register and provide programs for domestic workers.  These need to happen throughout the country.

See also: Domestic Workers in the Philippines

Run-off election for President

Last May, Representative Raul Gonzalez filed HB 6183 entitled “Run-off election for President”. This bill is intended to end the tendency for the country to elect minority presidents.

In this set-up, there would be a second round of elections for president, unless a candidate gets more than 50% of the vote. In the second round, the two candidates with the most votes would be the ones left to choose from.

I agree with Gonzalez. The Philippines needs to select its presidents on the basis of a real majority vote, and no longer the plurality (which could mean quite a low percentage of the vote, if there are many candidates).

In addition to ensuring that the elected president was selected by an actual majority of voters, the run-off rule for presidential elections would also help to solve the conflict between “conscience” and “tactical” voting.  When there are more than two candidates, people often have to decide whether to vote for the candidate they really like, or the candidate that they think will win. Of course, if the candidate you like is the one you think is more likely to win, you don’t have a problem. But, what if this is not the case?  Then you may have to choose the candidate which you least dislike among the ones which have a good chance of winning (this is “tactical voting”).

With the run-off election, people will be free to choose among a wide field of candidates, truly on the basis of their preference, during the first round of voting. In the run-off vote, with only two candidates left, they would then choose the one that they prefer from the ones left. Thus, it would be “conscience” vote on the first round, and “tactical” vote on the second round. Quite convenient.

It is also an arrangement that will be good for the country. The winning president will have a real mandate from the people, and would be stronger in dealing with the rest of the government, especially Congress. And with a stronger mandate, there would be less need for shady alliances and the corruption that naturally brings.
In addition, there would also be more candidates who would run for president, representing a wider spectrum of political parties and programs.

After a while, if people get used to the idea of a run-off election for president; I believe it would be a good idea for this to be done for more elective positions, particularly those for executive positions.