THE ongoing war in the Middle East has been a severe disruption to the entire world, and has been particularly difficult for the Philippines. Not only have we experienced the shock of surging energy prices, which is a consequence of our near-total reliance on imports for fuel, the Gulf region is a major trade and travel hub that is now mostly impassable, and of course, our most critical concern is for the safety of the nearly 2 million Filipinos in the region.
The government’s response to the comprehensive crisis has been active, but uneven. To some degree, this is understandable, as the current circumstances were completely unexpected, and we have to go back more than 20 years to the Iraq war — which did not involve as much of the region — to find any sort of precedent. However, an unwelcome state of affairs still must be managed effectively, and while the government has taken some good steps, there is still much room for improvement.
First, with regard to the overseas Filipino workers (OFWs) in the affected countries, the government, and particularly Migrant Workers Secretary Hans Leo Cacdac, has put forth as good an effort as could be expected under extremely difficult conditions, mainly the constraints on air travel. Naturally, not everyone is satisfied with the results so far, but we can appreciate the challenges that must be involved in having to evacuate potentially tens of thousands of people from an area where airspace and airports can be closed without warning, and where access by sea is at best extremely dangerous.
As we have said before, the government should make an effort to coordinate repatriation and other security efforts with other Southeast Asian countries, as well as other friendly countries such as India and Bangladesh, which have large overseas worker populations in the Middle East. Evidently, there has been some cooperation, and that is good, but more could be done in this area.
The government should also have adequate support measures in place for returning OFWs and their families. Those who are repatriated are already at a serious disadvantage due to an unexpected loss of income, and to add insult to injury, they are coming home to an environment beset by soaring costs for fuel, energy and basic commodities.
Second, concerning the unstoppable rise in fuel costs due to skyrocketing oil prices, the government must act more quickly to implement relief measures, and there is not an acceptable excuse for it not having done so already. For example, even though the suspension of the fuel excise tax would only provide modest relief, this should have been a “no-brainer” for the government, a measure implemented within days of the beginning of the crisis with the start of the war on Feb. 28. We are now into the third week, and the necessary legislation is still moving at a snail’s pace, to the extent that by the time it finally is implemented, the relief it brings to consumers will be utterly inconsequential. Not only has the government’s lack of alacrity been a disservice to the public, it is a terrible political move that will erode public support, if the administration and Congress are actually concerned about that sort of thing.
Finally, the government should heed cautions from economic experts against market interventions to try to ease the burdens on consumers. In a March 10 commentary for the Asian Development Bank’s (ADB) blog, ADB chief economist Albert Park explained: “Shielding consumers from higher domestic energy costs through price controls or subsidies could distort market incentives and undermine the efficient allocation of resources. To protect vulnerable groups, targeted support is needed.”
This should be taken as a warning against making moves such as the proposal introduced by Senate President Vicente Sotto III this week to repeal the Oil Deregulation Law (Republic Act 8479). The bill filed by Sotto is little more than a shallow populist measure unsupported by any economic rationale, as the Philippines, being almost entirely reliant on imports, does not have control over the resource being regulated.
Park also cautioned against aggressively tightening monetary policy, something that the Bangko Sentral ng Pilipinas (BSP) may consider as inflation rises, because this could further suppress economic growth, mainly because the inflationary pressures are from external causes. Instead, Park recommends managing excessive swings in exchange rates and ensuring adequate liquidity. The BSP, in general, is managing monetary policy well, but the recommendation is still something they should keep in mind.