(Part 3 of 3)
AFTER the session, Calalang and Benedicto remarked: “Had the Dollar Plan been devised and implemented since 1946, there would have been no need in the past for import and exchange controls.” We were tasked to supervise the dollar-plan’s implementation.
Newspaper columnists and opinion makers reacted with profuse praises for the remittance program. “It is the most brilliant monetary maneuver in recent times,” observed the Daily Mirror. The Manila Times, in its editorial, praised the plan as “one of the most outstanding Philippine achievements” and gave us due recognition. Joe Guevarra, a Manila Times columnist wrote, “The first $100 million project was a successful assertion of Philippine economic sovereignty without irritation to both sides.”
In its final form, the large-scale dollar remittance proposal with the seal of American approval included five main items:
First was the “lipstick formula.” Red overprints — much like lipstick smudges — were used on the checks and treasury warrants to ensure they would be cashed only with the CB-PNB and authorized commercial banks and cashable only in pesos. This would dry up the black market through which veterans and pension checks had been channelled for years.
Second was the payment in pesos from exclusive sales of U.S. dollars to the Central Bank, allowing the CB-PNB to maintain an exchange market at a fixed negotiated rate.
Third were the salaries, henceforth to be paid in dollars, of about 16,000 Filipinos employed worldwide by the U.S. Navy.
Fourth was a provision that included expenditures of U.S. military transients in Philippine-based U.S. military installations as a dollar source.
Fifth was the large-scale remittance to the Philippines of dollar earnings of Filipinos in the Pacific U.S. bases, in Hawaii, etc. and the U.S. mainland.
Our economic diplomacy was a smashing success. The legendary Foreign Secretary Carlos P. Romulo, who succeeded Narciso Ramos, himself one of the original architects of the now successful ASEAN, said economic diplomacy was a “basic plank” of the country’s foreign policy and praised us for what he called our “stellar performance.” He instructed Philippine missions and embassies abroad “to stress trade promotion and the search for markets and investments.” We took a more expansive view that a diplomat’s principal task in a developing or underdeveloped economy is to “utilize and harness foreign affairs to help solve economic problems at home.”
In 2007 alone, remittances from overseas Filipino workers hit over $14 billion, part of almost $200 billion that had already made its way through to the Philippine banks. This was unimaginable in 1967, at the program’s launching, when the Philippines total bank reserves were about $400 million. Whatever the political environment at home, the economic impact of the remittances came to be felt strongly especially in times of crisis: the 60 percent peso devaluation in 1970, the oil shocks of the 1970s, the economic depression in the many years of the Marcos administration, the crisis years of the rightist military rebellion against President Cory Aquino, the Asian financial crisis that ravaged the Philippines in 1997-98 of the Ramos period, the ouster of Estrada, the series of coup and impeachment attempts against President Arroyo.
The dollar remittance model has encouraged copies of the system in India, Pakistan, Turkey, and Bangladesh, among other nations, enriching their foreign-exchange reserves, financing economic development, mass housing, and the small businesses of recipients in the countryside.
In 2005, believing the program could be more successful, we wrote the Central Bank, “The remittances are substantial but there is about 20-30 percent left that’s not remitted here. We have to create an Overseas Filipino Fund for the Filipino technicians abroad, who could put their monies in safe investments, instead of keeping them in saving deposits in banks abroad that pay 1 to 2 percent in high-yielding instruments, mass housing, etc. The international banks like ING Bank, HSBC and others can assist us in its implementation because they have global reach, and if we can get the Filipinos in America, Europe, and the Middle East through the Bank of America or Citibank and European banks, you can see the numbers add up fast. The sky is the limit.”
On July 8, 2005, the Bangko Sentral ng Pilipinas under the outgoing Governor Rafael Buenaventura and his incoming successor, Governor Amando Tetangco Jr., honored us with a rare national decoration. The man who conceived and carried out the program, negotiated with the U.S. state treasury and defense representations, finally won effusive praise from the very institution that had almost succeeded in killing it. (From the book, “Global Filipino” the Jose de Venecia Jr. biography by former Wall Street Journal Editor Brett Decker, published in Washington D.C., 2008).
(To be continued next week)