Analysis
Do Filipinos Have the Power of Choice?

Giving people the freedom to choose what products to buy and what services to avail of looks enticing. Proponents of globalization are inclined to argue that consumer power means the power to choose. Then again, how does this look in the Philippines?

BY DANILO ARAÑA ARAO
Bulatlat.com

Time and again, President Gloria Macapagal-Arroyo has stressed the need to give consumers the power of choice.

In her second State of the Nation Address, she defended the reforms in the electric power industry along that line. She said that consumers would eventually benefit from the competition of electric power suppliers.

Previous administrations also echoed what Peter Sutherland, then director general of General Agreement on Tariffs and Trade (GATT) said upon the approval of the GATT in 1994, about empowering the people by increasing choices.

In 1996, President Fidel Ramos defended the passage of the Downstream Oil Deregulation Act as an “anti-monopoly” measure. Through increased choices, he said, consumers will benefit from lower prices and better services.

In the wake of continuous oil price hikes during his shortened term of office (July 1998 to January 2001), ousted President Joseph Estrada agreed with his predecessor when he said that oil deregulation must be given a chance to work.

Giving people the freedom to choose, what products to buy and what services to avail of looks enticing. Proponents of globalization are inclined to argue that consumer power means the power to choose.

Maldeveloped power of choice

In a maldeveloped country like the Philippines, however, the power of choice can only be maximized by people who can afford to buy their preferred products and services. For the toiling masses, the parameters of choice do not rest on both price and quality. Instead, they just look for low, bargain prices that their minuscule take-home pay can afford.

Given that the daily minimum wage rate in Metro Manila, for instance, is pegged at P280 ($5.39 at an exchange rate of P51.90 per U.S. dollar), it would be hard for those earning minimum wage to get what they want, or even provide for their family's needs.

There is a need, therefore, to consider a person's purchasing power in order to know the so-called benefits of increased choices.

Purchasing power is the buying power of a currency compared to a given base year. At present, the National Statistics Office (NSO) uses 1994 as the base year in computing the consumer price index (CPI) which "measures the cost of a market basket of consumer goods and services."

As of July 2002, the purchasing power of the peso is pegged at P0.60 ($0.01). This means that due to increased prices of commodities, the goods and services that are bought at P1.00 at present can actually be procured at only P0.60 in 1994. (See Table 1)

Purchasing power is the gauge for the real value of one's money. Based on the previous data, the real value of one peso as of July 2002 is only P0.60 ($0.01). This implies that the peso's value has been reduced by two-fifths (2/5) due to the increase in prices of goods and services for the past eight years.

For the past five years, there has been a gradual decrease in the purchasing power of the peso. In 1997, it was pegged at P0.78 ($0.02). By July 2002 , purchasing power of the peso was reduced by P0.18 ($0.0035). (See Chart)

Indeed, the power of choice becomes a non-issue in a situation of low purchasing power. Seen from Philippine realities, the economic empowerment of people, particularly the poor, will not come from increasing choices but from increasing purchasing power.

At this point, government should heed the call for a substantial wage increase, muster political will to institute price controls and ensure the affordability and accessibility of basic commodities. Bulatlat.com

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