J Vol. XlV No.

July -August 1996

I Io.876.r.am

Bell transmitted
a complete sentence
through the telephone to his assistant
a short distance away in another room.
That event portended the huge poten._dof telecommunications

The Philippine

in transmit-

speed information
to any number atofinstaJntaneous
people regard"ring
less of location.
with

ISSN 0115-9097 I

Industry*

Today; we find ourselves armed

a technology
that can send

through telephone networks not only

spoken words but also written infermarion and computer data. This technology has radical implications
for
society. The miracle of telecommunications has significantly reduced naUonal borders and stimulated the pace

of human interacUon to such an extent

that a whole new world is flourishing
out there in cyberspace .......................
Sadly, however, the Philippine
telecommunications
industry has not
kept abreast of developments in the in_
ternationa] field,

by Ruperto R Alonzo ,

andWilhertR.SanPedro"

Why Did We Lag

irt 'reiecommunJcafion$?
Telecommunications

*Thisis a revisedversionof Chapter5 of a countryreporton "Infrastructure

andSustainability
of

infrastructure

is a vital

need in modem society.

th in thePhilippines"
submitted
totheAsianDevelopment
Bank(ADB)in preparation
fortheAsian Yet, the Philippines is one of the deelopment
Outlook:1996and1997.
veloping countries with inadequate
**Ruperto
P.Alonzois a professor
attheSchoolofEconomics,
University
ofthePhilippines.
Wilbert
SanPedrois a graduate
studentatthesameinstitutionandwasformerlywithPIOS.

J " _

Food: Is.

AnInventory
ofPhilippine

Crisis Looming?

Telecommunications
Porlicipants

1] Historical
Overview

It wa_ only three years ago when eellularphonesandpagerswereluxuryitems

which only the rich people could have
tucked into their belts. TOday,they have
become a necessity in a world where cornmunication has taken centerstage. A
multipage advertisement ofa paging cornpany, for instance, enumerated the oppormni_s thatm_htbelostbetweenparat and child (awareness of each other's
activities) and employerand employee O'ob
_o_o,on;
without a pager
The opening up of the telecommuni-

other's services in terms of wider area coverage, lowertollratesandfasterrespome

to application. The land phone market
which used to bedominated by the Philippine Long Distance Telephone Company
(PLDT) has been invaded in recent
months by the upstart Bayantel (orBayan
Telecommunications Holdings Corp., a
venture between the Lopezfamily and
New York-based NynexCorporation). The
consumers, of course, have benefited from
thi_ kind of competition ahhough thefirms
will nevertheless come out as winners in

_,a_*-ind_,.yin]093_tothemu,
h- the_.
rooming of a number of new telecommunicatiom firms which tried to outdo each

-_ P_, 16

: DEVELOPMENT RESEARCH NE-WS

I
|
I oncerns

July- Augur::
1996
'
',',.,'i
. " '

for global food security have often been raised in recent

years in the context of the debate on

further contends that world market

prices of food willbe much higher, and
the poor willbe priced out of the world
market. Brown's alarmist projections

Nutrifion whichhighlighted
a continuing large number of chronically undernourished population worldwide. Because of the international community's

environment, sustainabflity, and pop.ulafion growth as well as the impact of

agricultural trade liberalization under
the World Trade Organizafion (WTO).
These concerns
were successfully
brought
out to the general public

have gained some credibility with the

recent fall in world cereal reserves and
cereal prices.
The Food and Agriculture
Organization's
(FAO) director-general
has also recently warned that: "After a

apparent complacency
toward future
world food situation, the International
Food Policy Research Institute (IFPRI)
has conducted a series of research, conferences and seminars, and published
materials trader the theme of "A 20/
20 Vision for Food, Agriculture,
and
the Environment" since late 1993. The
problem of ensuring an adequate future food issupply
protecting
objective
to seek while
solutions
to the
world natural resources for future gen-

FOO_

IS

Crisis Looming?

underwayeratins"
Preparations
the World are
Foodcurrentl.for
Sumn_t
at FAO in Rome in late 1996 where
world leaders are expected to renew
their commitment to eradicate hunger
and malnutrition,
and achieve lasting
food security for all through appropriate policies, strategies, and plan of action.
Current concerns about the fu-

byC.ristina
C.David
2
...................

through

Lester Brown's

alarmist

ar-

renewed

period

of bumper

surpluses,

tides initially published in the International Herald Tribune (1994) and

subsequently
referred
to in other

we are now back to a situation where

the world's grain reserves have fallen
below the level considered necessary

widely circulated international publications,

According to Brown, China's cereal output will fall by at least 20 percent by 2030 as cultivated area declines
and yields stagnate. To maintain the
country's 1990 level of per capita consumption, 216 million tons of cereals

to guarantee global food security...and

world prices have soared and the lowincome, food-deficit
countries
will
have to pay out an additional $3 billion this year for their imports"
(Agence France Press [AFP] 1996).

ture food-population
balance
from a number of factors:

and

stem

_:_ Declining
per capita land
water resources.
The annual

growth rate of new arable land basil

decreased progressively from 0.38 pe_ql.
cent in the 1960s to 0.32 percent in the

in

1970s to 0.19 percent in the 1980s. In

highly populated
countries, the land
frontier has effectively closed. With
continuing
urbanization,
the culti-

of total world cereal trade. If per capita

cereal consumption is assumed to increase up to Taiwan's present levels,
China's cereal shortfall will reach 378
million tons.
Brown also states that Africa will

raising the global food-population

balance over the past three decades, concerted efforts have been made recently
to draw public attention
to future
world food problems.
In 1992 and
1993, the United Nations (UN), World

vated area is expected to decrease in

absolute terms. Among developing
countries, major expansion
of cultivable land area would be limited to
South America, where much of these
lands are still under forest. Conversion

experience a cereal deficit of 250 million tons by 2030, a 10-fold increase

from its present net imports. Given
such huge projected increases in world
demand for cereal imports which expc

Health Organization (WHO), and FAO

sponsored a series of meetings related
to the International
Conference
on

to agricultural land will thus entail environment costs. In Sub-Sahara Africa

which is also characterized by a rela-

will
to imported,
import level
level
that have
is about
double thean current

Constraintsto FutureProduction
In spite of the overall progress

_PaDer
Dresented
atthelOthAsia-Pacific
Roundtable.
KoalaLum_urJune5-8 1996

tively low man-land ratio, the high cost

of market and water infrastructure
would be a major constraint to opening new land for agricultural production.
With a rapidly-growing
demand
for water among households and industrial users, the opportunity or scarcity cost of water for agriculture has
likewise risen rapidly.Moreover,
as ix-

achieved under experimental

conditions with the rice and wheat green
revolution technologies have levelled
off (Pingaliet al. 1990). In fact, growth
rate of yield per hectare has slowed
down and even stagnated
in many
years. Although significant yield gaps
remain between farm and experiment
station yields, greater concern for both
health and environmental
costs of

early 1980s to not more than $8 billion/

year in the early 1990s (FAO 1996). In
the same period, agri-culture's
share
in total official development
finance
also fell from 24 to 16 percent. The decline in external funding for agriculture reflected budgetary
squeeze in
many developed countries as well as
the lower social rate of returns to agficultural investments
as world com-

rigation development
has exhausted
locations with nearby sources of surface water and begun to overextract
groundwater
sources, the cost per
hectare of ixrigation expansion has increased significantly
(Rosegrant and
_vendsen 1993) .......

higher pesticide and fertilizer applications limit the farmers' ability to close
that gap. In the meantime, potentials
for further
technological
advance
through biotechnology
and other sci-

modity prices collapsed in the 1980s.

The same factors have also lowered
domestic public expenditure
for agriculture inmanydevelopedanddevelaping countries. Consequently, public
expenditures
at the international
and
national levels for productivity-en-

Table I

hancing

investments,

specifically

irri-

+_; Deteriorating
quality of
ProjectedGrowth RatesoFAgricultural research
gationinfrastructure
and agricultural
are reported to have fallen
land and water resources. There are
and Cereal Production and Demand
some evidences that land and water resince the 1980s (Rosegrant
and
sources are being
(In percent)
Svendsen
1993,
degraded through
FAO 1996).
World Developed
Developing
Countries
soft erosion, water
CountriesTotal Sub-SaharaNearEast Latin East South
logging, salinizaAfrica
N.Africa America Asia Asia
tion of irrigated
ProsOer;'l_ io; the
lands, and pollu]:aGe.!_c;_;_f'_orr
W
tion of surface and
1990-2010 (FAO)
A number of
groundwater, with
Agriculture
Production
1.8
0.7
2.6
3.0
2.7
2.3
2.7
2.6
recent projection
consequent
negaDemand
b8
0.5
2.8
3.3
2.8
2.4
2.8
2.8
studies for the year
rive effects on agri2000 and beyond
-- _ultural productiv(Mitchell
and
...Ity.
Fishery
reCereals
Production
2.0
1.0
2.1
3.4
2.3
2.3
2.0
1.8
Ingco 1993, Rosesources are overexDemand
2.0
0.5
2.3
3.4
2.6
2.4
2.0 2.1
grant et al. 1995,
plaited and forest
Alexandratos
covers
have
dwindled in many
areas.
Resource
degradation
may
be due to agriculrural intensifica-

1990.2020 (IFPRI)
Cereals,
Production
1.5
Consumption
1.5

t-ion (increased cropping intensity and

high fertilizer and pesticide applications) or to rapid growth of other economic activitiesand
urbanization under policy and institutional
frameworks that essentially ignore environmental effects,
_
frontier.

Approaching
Maximum
,

technological
yield

ceilings
|1,

1.0
0.8

1.9
2.0

3.0
3.1

2.4
2.2

entffic breakthroughs,
and thus for accelerating
productivity
growth, are
quite uncertain,
_ Failing public expenditures
for agriculture.
Official development
assistanc e (bilateral and multilateral)
to agriculture of developing countries
in constant 1985 dollars has decreased
from around
,, i i i

$11 billion/year
i

m|

1,9
..... 1.8.....
1.7......
1.9-----

1995)
provide
quantitative
assessments
of the
future food supply-demand
balonce. These studies

are based on different methodologies

and coverage of commodity
groups
and projection periods. It is remarkable, however, that they have arrived
at generally consistent conclusions at
the global level (Table 1), although
there may be significant differences for
some regions.

in the

-,* P_
..........

DEVELOPMENT RESEARCH NEWS

Philippine Telecommunications...
P,_ 1

July - August 1996

Philippine capital market iimitations. There is not enough money in

Scale economies.
The telecommtmications
industry is a capital-in-

the capital market to finance

intensive telecommunications

tensive industry with slow rates of return on investment.

Uneven popula-

capitalinfra-

telecommunications
facilities. From an
economic point of view, there are sev-

structure projects. An estimate in 1991

pegged the capitalization
of the Philippine stock market at only 12170 billion. The National Telecommunica-

tion densities and low incomes of target consumer markets in the regions
may result in underutilized
facilities
and late payment of bills by subscrib-

eral factors that tend to influence the

underprovision
of basic telecommunication services and facilities,

tions Commission (NTC) reports that

as of 1995, investments in telecommunications totalled 12125 billion. There

ers, leaving low profit margins

thereby discouraging
investors.

Market structure. Prior to trade

liberalization in 1993, the telecommunications industry was dominated by

is real danger that investment in telecommunications

may crowd out the
available investment in other endeavors and may have a detrimental effect

Market failure. Corollary to the

above, simply relying on market forces
in rural areas where population and
level of economic activity are small

on overall investment
for development. Ahigh foreign exchange requirement for the purchase of imported telecommunications
equipment is also a
detriment,

will not make possible the putting upd

of telecommunications
facilities sincl
there is no market
to speak
of.TM
Government
often fills in to remedy
these market failure situations.

the Philippine Long Distance and Telephone Company (PLDT) with more
than 60 telephone companies operating on a limited scale within towns and
cities in the country. PLDT started operating in 1928 under the Philippine
Legislature Act No. 3436 which gave
the telephone firm a 50-year franchise

which can be made only through

its gateway. It owns and operates
the country's only backbone, the
public switch telecommunications network (PSTN). A backbone is a main trunk or series of
towers using microwave
radio
that makes long distance calls
possible. Other telecommunications companies are only hooked
up to this backbone. PLDT also
has a strong presence ha the local
exchange telephone service.
Barriers to entry. The Philippine legislature has the power
to vest franchises on telecommunications services and facilities.
Entry into the industry, therefore,
may require a certain amount of
political muscle.Due
to the difficulty in getting a franchise, some
investors opt to buy into shares
of existing telecommunications
companies,

Supplyand Demand Situation

for Telephones

to
develop
telecommunications
services
throughout
the country. PLDT
has a virtual hold on overseas calls

T0bleI

Telephone density and availabil-

Telephone
DistributionbyRegion
(asofDecember
1995)
Region

CAR
I
II
III
IV
V
VI
VII
VIII
IX
x
Xl
Xll
ARMM
NCR

and

ity. Just how acute is the shortage

of

telephone
lines? Government
estimated telephone density at less
Working Population Telephone
than one telephone per 100 perLines
Density
sons in 1989 which improved to
per I O0Pop.
1.7 telephones per 100 persons in
1994 and 2 telephones
per 100
16.344
1,329.477
1.230
persons
in 1995. The govern_
27,71I
4,031,023
0.690
ment's goal in the next five years,,
7,685
2,712,823
0.280
is to increase telephone density to
91,624
7,167,045
1,280
at least 10 telephones per 100 per132,114
9,698,447
1.360
24,256
4,490.359
0.540
sons.
47,723
6,155,087
0,780
Meanwhile,
public
tele82,494
5,277.624
1.560
phone booths set up through the
13,155
3,527,149
0.370
government's
municipal
tele17,568
2,890,386
0.610
phone program numbered 757 in
23,554
4,111,359
0.570
1994. The number of municipali58,532
5,271,986
I.110
ties (627 or 40 percent out of the
14,593 2,387,999
0.610
total of 1,604 municipalities) with
5,978
846,308

2,098,512
9,117,632

0.280
9.280

telephone
access in 1992 increased to 1,164 (72 percent) in
1994. More local exchanges
were likewise interconnected
to
the public switch telephone network (PSTN) operated by PLDT
leaving

only

four

local

ex-

DEVELOPMENT RESEARCH NE_WS

changes not connected

by 1994.

to the PSTN

Jut1 - August

.......
Table 2

Mobile
Cellular
Phone
Subscribers
Unrest demand. In 1992, there
were 800,000 unserved
applications
for telephone
lines nationwide,
600,000 of which were in Metro Manila alone. The demand
was still
unrest in 1993 with more than 700,000
applications remaining. At the end of
1995, PLDT had less than 2 million
telephones in service.

byCompany

Number of Subscribers

Piltel
Smartcom
_x_elcom
GHCR
Islacom

close second with 112,945 subscribers

(or 35 percent of the market).
Trunked repeater subscribers increased by 214 percent between 1994
and 1995. There were 5,982 subscribers in 1994 which sharply increased to
18,799 subscribers
in 1995. Liberty
Broadcasting
Network
captured
33

(asofDecember
1995)
Operator

1996

- 202,358
120,378
100.126
41,000
30,000

percent of trunked repeater subscrib _

ers in 1995, followed by Radiomarine
with 20 percent.

Opening Up
the Telecommunications

Regional disparity. The distribution of phones is likewise highly uneven across regions_ sixty percent of

Industry:

RecentGovernment Policy
The NTC, a government
quasijudicial body, exercises regulatory au-

heMetro
total number
of phones
are located
"in
Manila with
a telephone
density of 9.28 lines per 100 people. The
rest of the country has a telephone density hovering at one to less than one
per 100 population,
There is a correlation between

jumped to 493,862 at end of 1995. The

growth rate of cellular mobile phone
subscription was a phenomenal
1,327
percent in the period between 1991

thority over the telecommunications

industry. It sets rules and guidelines
on establishing, operating, and maintaining telecommunications
services
and facilities. It also supervises, adju-

the level of economic development

and the number of working telephone
lines. Metro Manila (National Capital
Region) which is also the most economically
advanced
region in the
country, has the highest concentration
of working telephone lines at 846,308.
Southern Tagalog (Region W) is a far
second with132,114 working lines. The

and 1995.
Cellular mobile phone systems
initially hit the market in 1989. At that
time, the government granted Pilipino
Telephone Corp. (Piltel)and Extelcom
franchises to operate cellular mobile
telephone systems, in 1993, Smartcom,
Islacom and Globe Telecomjoined the
fray. At present, Piltel takes the mar-

dicates, and controls all forms of talecommunications

services. Policy development for telecommunications,
on
the other hand, is undertaken
by the
Department
of Transportation
and
Communication
(DOTC).
The steady inflow of new players in the once-closed telecommunications industry (see Box) was a direct

egion is home to Calabarzon (Cavite,

Laguna, Batangas and Quezon), the
fastest growing
provinces
next to
Metro Manila. Cagayan Valley (Region
II) and the Autonomous
Region for
Muslim Mindanao (ARMM), two economically depressed regions, have the
lowest number of working lines at
7,685 and 5,978, respectively (Table 1).

ket lead (Table 2).

offshoot of recent government policy

geared
at market
reform.
Recent
govemmentpolicyontelecommunica_
tions may be summed up as follows:

Source: NTC.

Shift to cellular mobile phones,

The demand for mobile cellular types
has gone up over the years due to the
shortage
of fixed telephone
lines,
which in turn is a result of a growing
population base and an accelerating
level of economic activity. Although
there were only 34,600 subscribers in

Growth ofpaging and trunk repeater services. Paging and trunk repeater services also provided an alternative which further narrowed the gap
between the limited supply of fixed
telephone
lines and increasing
demand. The National Telecommunications Commission
(NTC) reported
that the availability of trunk radio systerns had minimized the operation of
illegal radios,
There were 201,047 radio paging
subscribers in 1994 which increased to
324,816 (or a hefty 62 percent increase)
by the end of 1995. Easy Call captured
37 percent of the market with 118,775

1991, the number

subscribers

of subscriptions

while

Pocketbell

was

_:_ Policy on universal

access
through compulsoryinterconnection.
Government's
response to the gap in
telecommunications
supply and demand was to open up the sector to
more players in 1993. Executive Order
(EO) No. 59 issued in February 1993
mandated
the Compulsory interconnection of authorized public telecommtmications carriers for a universally
accessible nationwide telecommunications network. As of December 1995,
-m P_,_ 6

policy

PhilippineTelecommunica6onso..

is contained

in E.O. No. 109

garding the development

of a satellite-

which mandates operators of the lucrative cellular mobile telephone and

international
gateway facilities services to cross-subsidize
and carry out

based telecommunications
industry in
a competitive
environment.
DC No.
94-277 issued in July 1994, on the other
hand, tackled international
satellite

60 interconnections
agreements were
forged by local exchanges while six interconnection
agreements
were
reached by international
gateway facilities. Through this scheme, smaller
telephone companies were given access to remote points via PLDT's backbone and gateway facilities. E.O. No.
59 also gave the public the choice to
use the toll facilities of PLDT's corn-

local exchange carrier development to

underserved
areas. The NTC has authorized the following firms to operate local exchange services (LECs): Isla,
International
Communications
Corp.
(ICC), Piltel, Major (a subsidiary
of
Philcom), Philippine Telegraph and
Telephone Corp. (or PT&T, an affiliate
of Capwire), Digitel, Globe Telecom
(GMCR) and Smart. Within the next

commtmications
policy and defined
the government's
position on new satellite-based technologies which aimed
to broaden access to international
satellite systems.

petitors such as Eastern Telecommunications Philippines,

Inc. (ETPI) or
Philcom although still using PLDT's
backbone. The policy is also expected
to spur more investment by the private
sector in telecommunications,

three years, these operators are commitred to openup 4,699,279 new lines,

ment-owned
or oFerated telecomrnu.
nications facilities through public bid
ding and included
provisions on incentives toward this goal. RA7925 also
paved the way for deregulation in the
setting of service rates of various telecommunications
services which are

Policy on cross-subsidizafion. Another important government

It delineated

,,,. P,_ 5

_',_ Domestic
communications
policy. In June 1993, DOTC issued Department Circular (DC) No. 93-273 or
the domestic communications
policy,
government

policy

re-

0,_Public telecommunications
policy act. Republic Act (RA) No. 7925
was enacted in March 1995 and encourages the privatization
of govern

presently allowed to compete freely.

The rules and regulations implement-

Inventoryof PhilippineTelecommunications
Participants
Office,
are subdivided,into
international
and
do Telecommunications
.
mestic
operations.. ASof
1995, five
com'
'
o Pagingoperation
panies provide international records car,
.
.
.
forms of transmission 'of information
r er Servce" namely:. . ' .
"'.'E evencompanies are curcentlycomthrough'voice, record or data Over.long
' ' ' ' ' '.' '
'
peting for this viable service: ,.
distances primarily through a telephone
Capitol'Wireless, Inc.
system. Wecanclassifythetelecommu* .Eastern Telecommunicatibns.Philip :. Easy Call COmmunicatians'Philipnications industry bytype of service propines, Inc.
' ._
. pines,.Inc. '.
',,',,
vided. Broadly speaking, telecommuni .GMCR,..Inc."
. .. Pilipino.TelephoneCorp. (Piltel)
cationsserviceswouldincludethe follow*
' Philipoine, Global Communications,'
" PhilippineWireless, Inc. (Pocketbell)
ing:carrier'scarrierservice, recordscar_lnc_
TeodoroRomasanta, Inc. (Digipage)
tier service, paging operation, public re PLDT '
..InfocomCommunications Network; ..
... Inc. (Infopage)
.'.
peater system operation, public coastal
O"nthe other hand, six.entities pro-'
Radiomarine Network, Inc./E..M.
stationsoperation; radiotelephoneoperavide domestic records carrier'services:
tion, cellular mobile telephone system,
Orozco(Powerpage)
telephoneoperation',very small aperture
OceanicWireless Network',.'lnc.
. E.rmitaElectronics, Inc. (Starpage).
terminal (VSAT)operation, gatewayfacil GMCR,Inc.. "
' .GMCR,Inc.
ityoperation, andbroadcastand CAW.013-. , Philippine Telegraphand Telephone
. Smart Communications, Inc.
erations.
Corp...
.
"
Isla Communications, Inc. (Icon)
"
RadioCommUnicationsOfthe Philip-. ' Multi-MediaTelephone, Inc,

i_ I rom a technical 'perspective,

'
telecommun cations would,include all

Recordscarrier service
Recordcarriers transmit facsimiles
andoffer telex andtelegraphservices and

i'

ii

,pines ,inc.
,
' ,
'UniversalTelecommunications Services, i'nc.
....
'

ii

'"

'

'

'

"

o 'Public repeaterSystemoperation
.
.
Public mobile radio communications

ing RA 7925 were issued by the NTC

in September 1995.

bone or the public switch telecommunications network (PSTN). EO No. 59

called for compulsory interconnection

'..............

Table
3

Sehded
Telecommunications
Companies'
Someissuesrelatedto
of authorized public telecorcLraunicaFinondol
Performance
0994)
tions carriers, thereby allowing
deregulation
and liberalization
The deregulationandliberaliza-

smaller phone companies access

to various
points
here and

tion of the telecommunications

sector
has transformed it into an exciting industry to watch today due to competitian,
mergers,
strategies,
and
counterstrategies
of key players, all
done in the capitalist tradition (Table
3). Ultimately, competition in the once
monopolized sector means better and
more innovative service for consumMrs. However,
not everything
is
smooth sailing all the way.
PLDT's residual monopoly is still
in place to potentially block the policy
of interconnection--the
connection of
lines of different telephone networks
with one another. As mentioned ear-

abroad via PLDT's backbone and

gateway facilities. However, it
has been difficult for new industry players and smaller firms to
negotiate favorable interconnection deals with PLDT since it has
a stronger bargaining position as
the incumbent operator.

lier, PLDT operates the country's back-

-,a P,_ 8

Problems in universal actess policy. EO No. 109 required

cellular mobile telephone operatars and international
gateway
facility operators to put up telephone lines in both urban and

PLDT
Piltel
Smart Communications,Inc.
PT&T
GMCR, Inc.
JSTelecommunications
RCPI
Oceanic Wireless Network
CapitolWireless
Phil Global Communications
Eastern Telecom. Phils.
Phil Comm. Satellite Corp.
ExpressTelecom. Co.
EasyCallComm. Phil.
DigitalTelecom.Phil.
InternationalComm. Corp.

23, I16,439,000
2,546,646,000
146,032,000
472,598,000
453,667,000
258,238,000
172,24.7,000
65,948.000
50,974,000
1,441,660,000
1,200,737,000
756,613,000
643,706,000
454,903,000
259,014,000
219,151,000

Source: Securities and Exchange Commission.

servicesare made possiblebypublicrepeater net_vorks.The government has

_rantedpermitsto the followingcompaI_iesto operate publc repeatersystems:
Contel Communications,Inc.

InternationalCommunications
Corp,
Uberiy BroadcastingNetwork,Inc,
OmninetPhilippines,Inc,
TeodoroRomasanta,Inc.
RadiomarineNetwork,Inc.
CoronaInternational,Inc.

Infocom Communication Network,

Inc.
Universal Telecommunication Systerns, Inc.

"

GMCR,Inc.

_ Telephoneopellation
Sixty-threepriVatecompaniesfunction as telephone operatorsthroughout
the archipelago.In_,1995, they include
large companies(Digitel,islacom, PLOT
and Piltel) and modest ones whichsetvice either a municipality (such as the
BalagtasTelephoneCompanywhichsetvices the municipa ity of Balagtas,
Bulacan)or a small island (such as the
Camiguin TelephoneCooperative).
The government directly operates
four telephone systems: the DOTCTele-

comingand outgoing internationalphone

calls, data or record traffic. By 1995,
there were nine entities providinggatewayfacility,namely:
PLDT
Phil.GlobalCommunications,Inc.
EasternTelecommunications,
Inc.
InternationalCommunicationsCorporation
* GMCR,Inc.
CapitolWireless,Inc.
" Smart Communications,Inc.
Isla Communications, Inc.
Digital Telecommunications Philippines, Inc.
*

"

WorldwideCommunicationInc. (Radiophone).

communications Office, City of Basilan

Telephone, Misamis Oriental Provincial

_ Broadcast and CATVoperations

O Cellulptmobiletelephonesystem
.
ExprQsS
Telecommunicatioo
Co.Inc.
" PilipiooTelephoneCorp.
Smar_Communications,inc,
Isla C_ommunications
Company,Inc.

Telephone
the Municipality
of SanJoseSystem,and
TelephoneSystem.

.1.995,there
were
TV stationsAs
inof
the
Philippines,
317 117
AM sations
and 289 FM stations.The rosteralso includes 557 CAW stations operated by
391 CAW companiescovering441 cities and municipalities.

Gatewayope.ration
A gatewayis a toll gate that determinesthe amountto be chargedfor in-

al[ematige:

: itica fions:iL0cal: C0mpanies continue

[o ta p forei: gn:inv:e._[0r_
,_ L as p :at[herS
....

::::::::
: :::::;::::::::: :i::::: : ......:::in upgrad:ing:their::facilitie
.iAf
telephone:
:ci ..... _anies:
present:; foreign investors in:thetele,::
.......
....
m:mUni:cations: sect0r :inciude: Ko_ :
......

X :::rea: Telecoms: (parmer::0f :Capwire);

:Ne_ Zealand:
Telecom: :::(Digitel)/
Cabie and:Wireless (b6th:6f:Eas_ern);
i:::Mililcom:: (Extel):c0m);:
Singapore

...........

ted to:: Shinaw:atra:

..........

.......

:of: Thailand

USA: (Philc0m),

:(Islacom)
and Nippon

i:

:::::::(i:::::
: ::::::::
:::::::::::

:;::Si
: ::D:0_G:Three-Yeai
Re:p6_
1992-1995

.....

::i::

i :

i:Cationsfa=:
arei_eeded

......

Telegraph
:and:i Telephone
Corp,[
(Smar:tcom):i:
: :
: : An0ther: p0ssibi_ o:f;
::outc0me:
:capital _d_,g
Constrainis will be: the: :
potential merger of weaker firms with

lee0_ations:
facili- I ::stronger::players:::
:
:
,IrC:estimated that
::
vested::mtelecom,.,..,,..._,.:,
._, ..........
: ...... ............ ................
:
:.... : .
_demand:for:tele-::
:.
;ilitiesanctserwces:
:
:
mal:ca:pitalinvest-v
:..........:

.............
:i::_e::;:_

: ::
iS

:: :

:mo_ :i:

::fi

....... Asa :result Ofliberalization, more

4.
.....::
......
plaYers---particularly:
me: mg on:es_
_ .c ....
:.._
............
..... :
.... eamect: entry l13tothe once narcl.-to=ac;
_
: ,..:
....
:
cess maustry,::tlaus _eve_mg me:play-:

;: : : 2:1: ::
ing: field Five: ceiitil:af::ph0ne comp
; that: tile
.......... .......:
:
....._ ..... ....
' '
:: nies:areinoperafi0n:atpreS:nt(from:

the number :6f subsCriberS:ff0m 34;60011

capl_ :....
:3............
..........
_:d:
to 495 ;862:
Thefe are
e e traie
..... ::: in 1991:
...... ......
.... in:1995_ :.....
...........
nine international
0pera tors aUtho:::
.......
:
: rized :by:the:NTC e0mpared :to three)
the inaclequacy ot ......
; ...... :d
92 E1 :it.....
before:19,
"gt :comd: _ith:the .....
liberal _: whicnexiste
....
.....
:
....._
.......
parties
prowae:
pag:tng
serwces..
.......
in.tlUX "
.....
......

)EVELOPMENT RESE ARCH NEWS

, ._,i!;!
_

cal patterns would be much higher

than those of developed cotmtries (at

-:Is the growthrateinpopulation

will continue to decline;

least double). However, growth rate of

demand would be lower than production in developed countries, while the
opposite would be the case for developing countries,
Hence, developing countries will
increasingly become net importers of
food, mainly from land-surplus
developed countries. That would be due not
so much to deteriorating food production-population
balance but rather to
changing taste preferences
towards
wheat, livestock (and feed grains), and
other high-valued food commodities,
Projected import demand of developing countries is relatively modest. Judging from projected trends in
world food prices, there would be no
food crisis in the next two or three de-

_:_ the proportion of population

with relatively high levels of income
and food consumption
characterized
by low income elasticities for food will
increase; and
_,_ many
poor countries
or
population groups with relatively high
income elasticities for food are unlikely
to achieve rapid economic growth.

cad.es. Two separate world price projections presemed in Table 2 indicate

a continuing decline beyond year 2000.
In fact, recent estimates of
world price effects of ag1990
995 2005" 2020'"
ricultural trade liberalization expected to occur in
100.0 I 13.5 98.8
the mediumand longterm
under
the
overall di100.0 100.0 90.I
100.0 103.8
81.2
rection of the World Trade
100.0
87.8
Organization
show these
100.0
74.3
increases to be relatively
100.0
78.0
modest. These are typically less than 10 percent,
and tiros would not be
100.0
BO.5
I00.0
78,4
sufficient to reverse the
100.0
84.6
projected declining trends
100.0
77.I
in real world prices,
The declining
real
100.0
90.1
world food prices in the
face of slower growth of

assessment oftheworld
food situation
contradicts Brown's alarmist prediction of China and Africa's cereal deftcits by year 2030. Although Brown's
projection period extends up to 2030,
import demand projections into the
early 21st century in other studies are
much lower. Brown's projections were
not based on any explicit demand and
supply 'modelling effort but on certain
assumptions about growth in population, demand per capita, and production. In contrast, the other studies were
based mostly on econometrically
derived demand and supply models, and

Food Crisis Loomingo,o

P,_, a

Cognizant of the above food supply constraints, all of these studies indicate a continuation
of the historical
slow down in production growth rate.
Compared
to the 1980-1992 growth
rate of 2 percent, agriculture into the
early 21st century is expected to grow
at about 1.8 percent per year, and cereals at a somewhat lower rate of 1.5
percent. Growth rates of production
(both agriculture
and cereals alone)
and consumption
among developing
countries as consistent with the histori-

Table 2
Proiected Trends in Real World Frices
of AgricuJtural Commodities
(1990 = 100)

World Bank
Agriculture
Food
Cereals
Rice
Wheat
Corn
Rosegrantet
Cereals al.
Rice
Wheat
Corn
Meat

.July - Au!lust, 1996

' Based
onactualprices,
" Basedon projected prices,
Sources:
Adopted from:
WorldBank.
Commodity
Markets
andtheDeveloping
Countries, A WorldBenkQuarterly, 1995.
Rosegrant.M.W., M.Agcaoili.,_mbilla,
andN. D. Perez.
Global
Food
Projections
to2020:Implications
forInvestment.
International
FoodPolicyResearch
Institute,1995.

production
suggest that
future world demand for
food, particularly
cereals,
will also increase less rapidly in the future than in
the past for the following
reasons:

In addition, the projected gap in

food. production and demand in developing countries will not substantially
widen because the resulting higher
world prices in. the short run will induce increases in domestic production.
The Case of China and Africa
The aforementioned
prospective

experts' judgments
on the prospects
for technological change and other factors affecting growth of cultivated area.
and productivity.
Except for the
Huang et al.'s study which was liraited to China but based on the most
detailed country modelling effort, the
other studies used a complete world
demand-supply
framework.
The most conservative projection
of import demand was by Rosegrant
et al. at 22 million tons by 2020, almost
equal to the FAO-Alexandratos
and

12000
:and

:2030i

:i

miiii0n::to:*

:indic:a
i

::i::27

5 mi.ili0fi: ions: in:2020_

,g
:i ::Alexandrat0Sll
a_di:de
Haen
...........Ofpro-i: :(i:995), in
i
jectiOn:: is :nOt: to: b:e taken::
Seriouslyi:{;;
g :domeStic prod uc tion :grows i
out: ii i:percent ilaf: the sa me: rate of:::pOpula:tion; fit a [:

a
:net:

if
from itsl
:fali:

........

:
ii

tly exag-such
a conSumpfiOn
leVel:by::theni
...........
which does not seem t6 bea realistic:
alp6r:t: de_
i::whiCh

level Ofnet imports would per.,

imply a
piia consumption Ofi2901kilograms;
i
pefCentl increase between
990 mid:2030 Sub2Saha fa :,_rica mus

prospecti.: On thel other:il l_and,if: eon_

st_pti0n
percapitais:assumedto:re
2:
n:cOnstant; _e implied prod.uction

_
Would::only be 34 kil0gfams; an unbe2 :
ithe Same: growthl : lievabi_: lower :ilevel:i Of grain produc2
::be:_eefi:::2010:: tion peel Capita e6inpared :to the curi:ab0ut 50 i rent level:of:140: kil0gr:amsi
:: :
.....::
.....
i:
ai/s mod_ i::
:
net rain
,_;;_ _: _ ,:

DEVELOPMENT
RESEARCHNE_VS

11

"

Histo rical o
.....

Production

verview

,,,

July- August1996

,,

,,

'

ture of.rainfed conditions, Sub-Sahara Africa.was largely bypassed by'the, green

Despite growing land constraint, glo-'

bal food production has' generally out-

revoiution 'technology. Moreover, pervaSive government interventions in agricul-

paced population growth, increasing food

production per capita by.18 percent within
the past 30 years. Annual growth rate of
4=codproduction declined over the period,
from 3..0 .percent in'the 1960s to 2.3
percent in the 1970s, and down to about
2.0 'percent between '1980 and early
1990s. But so has population growth rate

tural outPUt' and input markets have dePressed incentives, and limited government' resources to' finance productivityenhancing, investme.nts ,'in this region.
' ' ,...' '.
'

food production
per
capita, drop
especially
the
sharp
among the
Eastern
'European
countries due to transition problems
encountered in the.shift

F,ig,ure]
Trends"in T0tol,Food and

Cerecll

Availabilityby,Reoion

which fell from 2.1 tO 1.9, and 1.8 percent, respectively.

Th',e , apparent
,, ,
,slowdown of world food'
production per capita,
by the 1980s has been
caused .mainly by the
downward trend in developed 'countries'

has been'declining
since the
1970s, Becahse of the low rate
of , irrigation
and unfavorable na,

demand, in turn,, ,depends Primarily on

'population, income per capita, and degree of
urbanization.
,
, ,
,,,
'.
. World food' ava'ilability for direct h'u...man. Consumption in daily'.ca or es per
capita, as a measure, of 'per capita effective demand, has increased over the past
.three. decades. This.growth is lower than
.the growth of per capita food production,
because an increasing proportion of that'
.
..'
production is fed to animals and indirectly
.consumed through livestock, and dairy
.products. Available food, however,,i's dis-.
tributed unequally, as dai'ly per capita food
consumption among developed countries'
,,,is about 3300 calories compared to about

Among,DevelopingCountries, ,
,"

'
"

,',

Totalfood

Cereals "

callcap/day
31oo--

cal/cap/day
21oo -NE_.d No.h^1,,o_
.....

29oo

..

.......,..

......

19oo

East 'Ael=

'.

, //

2700

LAtlI1 Ametlc_

2500

"

...

..

/'-

/-_---/

._/f--

2aoo

//_-J

17oo

........

t" Esst^sla

..:..::/

NE lind North A|rlo,

15oo

,..,..

,.

...::___.,.,.,
.........
;"'

....

. ....

,'"

lsoo

South

Asia

/,"

from a Socialist to market economy, By contrast, the growth performance of per capita

21oo

19oo

9oo

food production of'developing countrieswas

higher and consistently
on an upward trend,

17oo

7oo

The remarkably
strong growth record of

_ lOO y

L.tln America

___ .f_._--_

_soo
1961

1966

1970

1976

1980

'
' .' .

1992

5oo
1961
I..,.L_I..=,.......
1966

...
...

per capita food production was not, however, achieved uniformly across developing regions. The highest growth rate occurred in Asia due i.n.part to the green
revolution.in rice.and.wheat, and in part
to the policy and i.nstitutional reforms in.

"

1970

1978

1980

"_---

1966
_.,.L._.LJ_

1992

'. "

'

. .':
.
."International
trade' allows growth in
.food consumption to be'higher, than do.mestic food. production in countries .with
'to w comparative advantage in agriculture,

transition economies Such.as China and '

Vietnam. While per capita food produc/
tion in Latin America showed some small'
increases and remained just about constant for'northeast and north Africa, the
poorest performance Was by Sub-Sahara ...
Africa where per capita, food production'

1986

_---_

.....

ConsumPtiO n

2500 among develop ng 'c'ountr es in the

early 1990s..]'hat
difference has actu:
ally narrowed from nearly 60 'percent to.
less.than 40 percent as per capita food
availability in developing countries grew
annually at a faster rate (3.0%) than de-

It also stabilizes food availability and

prices, and facilitates a wider range of
food choices as comparative advantage,
in particular,..food commodities, depends '
much on..'factor
endowments"
and .
I.ocational factors. The'level 'and compo-

veloped countrie s (i.4%) because income

elasticity of food demand decreases at
higher income levels, indeed,,per capita
cereal ..consumpt on in developed countries has declined in absolute terms while

,,, sitj'on of food consumption

or effective

',,

'

,._ Pc._ Z2',

]Historical Overview...
p_

f!

that of developing countries increased as

consumption patterns shift towards livestock, fruits, and other high valued products when per capita income rises,

percent by 1990. However, hat 20 percent still represents a sizeable number--

Developed countries have increased

export shares because of the inherent

nearly 800 million--of

undernourished
population.
Although considerable
progress has been made in bringing down
the rate of undernutrition
in East and
South Asia, these regions continue to
account for two-thirds of total undernourished. In Sub-Sahara Africa, the number

comparative advantage in agriculture of

land-surplus countries in North America
and Australia, and also because of subsidized exports of highly protected commodities in the European Union and other
developed countries.

Figure i shows that wide differences

in daily per capita food availability exist
among developing countries with SubSahara Africa having the lowest (only

of undernourished are increasing rapidly,

at a rate even higher than population

2100 calories per capita) and Northeast/

37 percent between 1970 to 1990.

North Africa the highest level (3010 calodes per capita). Growth rate of per capita
food availability was highest in North
East/North Africa and East Asia, reflecting the rapid pace of economic growth in
these regions. Since the 1980s, food
availability in South Asia has also grown
rapidly. With the poor overall economic
performance of Sub-Sahara Africa, its per
capita food availability has stagnated,
declining slightly over the past 30 years.

growth in the region as the proportion of

undernourished rose slightly from 35 to

International
Trade
With the exception of the mid-1980s,
agricultural trade has generally grown

Although developing countries have

become more import dependent on food,

.......
Figure 2
Growlh

o_ AgriculluraJ

al]r__Output,

Trade

] 963-1993

(Percentage
Chc_n_je
m Each

Ferio_{}

(%)
25
II
20

'

Trade
'

Output

The progress in addressing food

availability problems is remarkable in the
light of the near doubling of population.
Whereas 80 percent of the population of
developing countries lived in areas where
per capita food supplies were extremely
low--under 2100 calories--this ratio is
now down to less than 10 percent. The
nature of the food problem, however, depends not only on the average level of

15

10

i_
.,,
kk'

food availability or consumption but on

the distribution of such supplies within
each country. FAO's estimate of incidence
of undernutrition considered both average
and distribution of food supplies in deriving the numbers of persons in developing countries which can be considered as
chronically undernourished. The latter is
based on some notion of nutritional
threshold level (ranging from 1760 calohecapita/day
for Asia to 1985 calorie/
capita/day for Latin America) which is set
equal to 1.54 times the basal metabolic
rate (Alexandratos 1995).

_
_,,
0

1963-68

1968-73

1973-78

1978-83

1983-88

1988-93

Source:GATT,International
Trade,1985-86and1994.
faster than production, contributing to the

the proportion of agricultural imports to

growing integration ofthe world economy

(Figure 2). The share of developing countries in total food imports has increased
to 28 percent, while their share in food

total merchandise imports have substantially diminished from 2'5 to about 10 percent by 1990. In terms of food imports,
this ratio currently represents only about

The proportion of chronically under-

exports decreased from 30 percent in

1974 to 26 percent in 1994. Consequently, most developing country regions
have become net importers of food, ex-

5 percent of total imports in South and

Southeast Asia, 10 percent in Latin
America, 12 percent in West Asia, and
15 percent in Africa. It should also be

nourished population declined significantly, from 36 percent in 1970 to 20

cept for Latin America which remains a

significant exporter,

emphasized that increased import demand has been largely induced by chang-

Looming.+

reported because official data on land

area have been reportedly understated

Production Potentials
Although
most analysts have
contradicted
Brown's alarmist scenario, they have nonetheless generally

by as much as 30 percent. This suggests

a considerable scope for increasing
grain yields even at the same level of
teclmology because government grain
prices, particularly rice, continue to be
undervalued
despite liberalization
of
retail prices (Huang and David 1994).
Gale Johnson (1993,) indeed lamented

taken a conservative estimate of future

production
growth.
Alexandratos
(1995), for example, pointed out that
average growth rates of per capita ag-

that China does not have a grain problem but a series of policy problems in
the pricing and procurement of grains.
Furthermore,
the full benefits

ricultural production of developing

countries, as a whole, have not been

from a private economy have not been

obtained asfarm households donut as

1970s as a result of the sharp increases

in worldcommodityprices in 1972 and

generally
compared

1973 turned out to be a short-run phe-

true for countries

which have low, as

yet have full property rights over land,

as is also the case in Japan, Taiwan, and
South Korea_ As labor becomes in-

nomenon, as world prices collapsed in

the late
1970s
and1990s.
continued
its downward
trend
into the
A confluence
of events caused that price peak includingthe productionshortfalls in SouthAsia
and many SoutheastAsian countries, the
short cereal crop in the US, Europe and
former USSR, and the failure of the Peruvian anchovy catch which is a major
source of protein for livestock. Allof these
were due to adverse weather conditions,
TheUSSR'sdecision
shortage was also
exacerbated
by
the
to increase
grainim-

well as high, shares of agriculture in

their total economy. And with the ex+
ception of China, growth rate of per
capita agricultural production in the
more agriculture-based countries accel erated in recent years, particularly
in South Asia.
Alexandratos further argues that
the slow down in agricultural growth
since the 1980s primarily reflects production adjustments in the main ce-

creasingly scarce and larger farm sizes

are called for to facilitate adoption of
labor-saving technologies, voluntary,
market-driven ]and transactions pussible only with full ]and property
rights system would be the most efficient means of adjustment to that farm
production
structure.
In Japan and
Taiwan, that adjustment was initially
addressed through part-time farming.
That route, however, has now ex-

ports, rather than to accelerate the

slaughter of livestock as a response to
:he fall in domestic grain production,
_uickrecoverywas alsohamperedbythe

real-exporting countries in response to

low world prices, the need to control
the growth of stocks, and the transition problems encountered by Eastem

hausted its limits and therefore large

inefficiency costs are incurred with the
continued prohibitions inland market
sale and rental.

Europe. That flexibility implies that

production
can also be easily expanded when shortfalls in supplies
The declining trend in agricultural
raise world market prices. The agriculterms of trade was caused in part by retural trade liberalization
underway
duceding
theimprtsuccessdemandof
thefrgreenCerealSrevolutionfllw
would actually increase flexibility in
technology in many parts of Asia, generdomestic production adjustments and
ally depressed world economy, and growchange world market conditions.
ingprotectionismcoupledwith subsidized
There are also reasons to believe
exports in many developed countries,
that higher productivity
growth in
Even with the recent increases in world
developing countries can be promoted
grain prices as import demand rose and
further by policy and institutional reworld stocks dropped, the
long-term deforms and by greater public investclineofworldagricultural
andcerealprices

In other transition
economies,
such as the former USSR, Burma, and
Cuba among developing
countries,
potentials for accelerating
food production are high since the process of
dismantling and reforming socialized
agriculture
has only begun recently.
State-owned
enterprises
continue to
act as monopolists and monopsonists
in output and input markets, and the
domestic economy remains insulated
from international
trade developments. For the former Soviet Union,

in real terms have not been significantly

altered. _

the transition to market economy will

significantly
reduce crop waste and

ing preferencestowardswheat, livestock

(and, thus, feed grains) and other high
valuedfood as incomesincrease.Developing countries as a whole tend to have
much less comparativeadvantagein producingthese commodities domestically.
International trade has thus enabled them
to meet increasing levels and changing
patterns of food demand more cheaply,
World Prices
The historical long-term decline in the
agricultural
of trade inglobal
word markets reflectsterms
the adequacyof
food
supply relative to effective demand. Perceptions of a world food crisis in the

Foo,lCrisis
_

Pc__,'o

lower in the recent years

to earlier periods. This is

sharp increases in domestic prices of

fertilizer,with
the oilfarmcrisismachinerieS'in
1973. and energy

ments in land and irrigation development and agricultural

research. In
China, for example,
average grain
yields are not so high as previously

-., P_

1#

Implicationson FoodSecurity

FoodCrisis Looming...

What do these prospective foodsupply-demand

balances mean for

c.- Po9, ta

food security? To many countries, food

Food security as defined in recent FAO documents means a situation

where all households have the physical and economic access to adequate
food for all members.
That is, food

losses in harvesting, marketing, tr,,Lsporting, and processing

agricultural
products, and increase productivity of
feeds
livestock
production
(Johnson
1993). inThe
rice economy
of Burma,
the

security is often equated with self-sufficiency, particularly

rice self-sufficiency. To others, food security can be
pursued by being self-reliant, that is,
relying
international
if thatof
will meanon more
efficient trade
allocation

should be characterized
by availability, accessibility
(income and price),
and stability (supply and prices). This
should prevail not only at the global
and national levels but most important
at the household level. Food insecurity
is not so much a question of availability of food supply or adequate domestic production, but one of effective demand or sufficient level of income,

leading rice exporter in the early 1900s,

can be quickly revived with appropriate policy and institutional reform, following the experience
of Vietnam,
which became the third largest rice exporter soon after removing central

resources, and thus greater national

income and more stable domestic supply and prices as domestic production
is inherently unstable,
The debate between the two deftnitions is rooted on fears about riski-

state monopoly on international

in rice and agricultural inputs,

trade

ness of relying on international trade

because of perceived
instability in

particularly in poor countries. Food

security, therefore, is a question of the
rate of economic growth and distribution of income within countries, rather

Outside the transition economies, considerable scope for improving allocative efficiency in agriculture,

price and supplies in world markets

and possibilities of politically moti-

than the level of food production.

Of course, there are still countries
where food and agricultural production continue to be the main source of

"U/iereare reasoHsto bdkvt/lat i9 r froduetivity

growtttin devdo#HgcouJltriescanbepromoted/urt#er by
pOlic arid/ilst/tutioHalre/arms..."

DOTC

income for the majority of the population. Hence, rapid growth of food production

and food security

means

the

s_e
thing
Inthese
countries
such as
thosefor
inthem.
Sub-Sahara
Africa
and

particularly in grain crops, remains. In

many developing countries, govern-

rated trade embargos. These instabilities have been reduced by the devel-

South Asia, pr0ductivity-enhancing

public investments,
and appropriate
policy and institutional
frameworks
for accelerating agricultural
development are critically needed to increase

ment parastatals
continue to incur
high budgetary costs in procurement,
storage and marketing of grains which
could have been better spent on productivity-enhancing
investments.
At
the same time, these market interventions distort seasonal and geographic
price variations
and domestic price
level away from their social opportu-

opment of future markets and expansion of transport and handling facilities for international
trade while further reductions can be expected with
the agricultural
trade liberalization
under the WTO. Moreover, food is supposed to be exempted from political
trade embargoes; trade embargoes can
easily be overcome by third country

income and alleviate food insecurity.

For other developing countries, the issue related to food and agriculture is
how to alleviate the burden of adjustment of the farm sector as comparative advantage
in food and agricultu_ral production
declines in the process of economic development,
particularly in land scarce countries. In

nity cost and prevent the domestic

food economy from being more integrated into the world market. Yet,it has
been well established that even for large
countries, the lowest cost and most effective approach to national food security is through the use of international
markets, with a modest domestic storage program (Johnson 1991).

exports; and WTO can nowbe another

instrument for preventing food trade
embargoes.
Governments
espousing
rice self-sufficiency in the name of food
security are now, more often than not,
motivated by the objective of protecting farmers---Japan,
South Korea, and
the Philippines.

Japan, Taiwan, South Korea, and many

European countries, that burden has
been alleviated by increasing agricultural protection. But with the establishment of the WTO, the use of that policy
instrument will not be permitted as developing countries lose comparative
advantage in agriculture.
(_

,i i i

i|.

References

sibility

AlexandrOtos,Nicholas (ed.). World Agriculture:

Towards 2010. Food and Agriculture
Organization (Rome) and John Wiley and

players

compet-

Philippine 'J[+_lecommunica6onso.

ing

_ p,_,#
.....

operating
a network
of 300,000 or
400,000 lines, for example, may not be

Sons (New York, Chlchester, Bresbone,

Toronto,Singapore),1995.
--

of too many

in a

capital-intensive

profitable.

and H.Will
DeHoen.
"WorldConsumption
of Cereals:
It Double
by 2025?" Food
Policy 20, No. 4, 1995.
Brown, Lester."Questionsfor 2030: Who Will be
Able to Feed Chino?" and "When Chlna's
Scarcities Become the World's Problem,"
International Herald Tribune, 28 and 29
September ]994, respectively,
Crosson,Pierreand J.R.Anderson."Demand and
Supply:TrendsInGlobal Agriculture," Food

Easycall has over 100,000 subscribers,

Piltel's
Beeper 150 has more than
47,000, and Pocketbell has more than
112,000.
Telephone density has also ira-

Polloy 19, No. 2 (1994; 105-]19),

Food and AgricultureOrganization. "Food and
InternationalTrade." Technical paper forthe
World Food Summit,Food and Agriculture
Organization,Rome, ]996.

sector

where

Of the 11 service areas des-

ignated by the NTC, only four include

parts of the lucrative
Metro Manila
area where PLDT's main lines are elm

Pc,q,./6

proved
as a result of liberalization.
Partly due to pressures of competition
from new players, PLDT has launched

program to address the backlog

telephone demand.
Telecommunications

services

in
Vol. XlV No. 4

July-August1996

are

gaining a foothold in the countryside

, "Food,Agriculture,and FoodSecurity: due to the service area concept. Under
TheGlobal Dimension,"Technicalpaper for this concept, telecommunications
car-

__.

the World Food Summit, Food and

AgacultureOrganlTatlon,Rome, 1996. ,

riers were assigned a mix of profitable

and unprofitable
service areas such

Dr. PoncianoS.lntal, Jr.

President

"FoodSecurltyAssessment,"Technical
paper fortheWorldFoodSummit,Foodand
AgflcultureOrgdnlzatlon, Rome, 1996.

that ICC, for example,

Dr. Maria B. Lamberte

Vice-President

to service

both

was assigned

the Bicol

region

and

Huang,Jlkunand C.C. David."Policy Reformand

Agricultural
Incentives In China.*
Unpublishedpaper, 1994.

QuezonCity while Globe Telecomhad

-,S. Rozelle,ond M.W.Rosegrant. "Chlno's

Food
Economy
to the 2]st
Century: Supply,
Demand,
and Trade."
Unpublishedpaper,
1995,

pected to cross-subsidize
their operatigris through
international
and do-

Johnson.
D. Gale.
"Does
China Have
a 4,
Grain
Problem?"
China
Economic
Review
No.

The following
general
recommendations
will further
ensure
that

Central
Mindanao
Telecommunications

mestic

toils and cellular

1 (]994: 1-4).

gains

"Trade Effects of the

Dismantling
the
SoclallTedAgricultureof
FormerSoviet
Union.*Comparative Economic Studies35,
No.4, 1993.

squandered:

Mitchell, Donald O. and M.D. Ingco, The World

Food Outlook. Washington D.C.:WorldBank,

and Makati
City.
carriers are ex-

from

market

services.

reforms

are

Presence of a strong govern-

N.D.Porez.
Global
Food Projections
to 2020:
Implications
for Investment.
International
FOOdPolicyResearchInstitute.1995.
and M. Svedsen. "Asian Food
Production Inthe 1990s:IrrigationInvestment
and Management Policy."Food Policy 18,
1993.

iii

m,,

=m,

not

allow

itself

tured" by the regulated

larly PLDT, and should
tween

Hs.Andrea S.Agca0ili
Directorfor Operationsand Finance
Atty. KoqueA..Sorioso
LegalConsultant
Scat((

ment adjudicator. Liberalization may

bring unfair trade practices and preda-

ExperimentStationand FarmerYields.*IRRI should

Directorfor ProjectServicesand Development

not

]993.
tory behavior
on the part of dominant
Plngall,P., P.Maya, and L. Vel_co. "The Post- firms. In this context, the NTC is in the
Green
Revolution
Blues InGap
Asian
Rice best position
to address
the issue. It
Production:
TheDiminishing
Between
Social Science Division,LosBafios, 1990,
Rosegrant, Mark W., M. AgcaollI-sombllla, and

Hs.Jennifer P.T.Liguton
Directorfor Research
Information
Hr. Maria C, Feranil

competitors

to be

"cap-

firms, particuadjudicate
be-

with

only the pub-

lic good in mind. There should also be

continuing
legislation
on how to further improve the sector.
0
An anticipatory
role for government.
There

,, ,"

planning
is the pos-

JenniferP.T.Liguton
Editor-in-Chief
Genna J. Estrabon
Issue Editor
CorazonP.Desuasido
and Ha. LourdesM.Salcedo
ContributingEditors
ValentineY. Tolentino
and Rossana P. Cleoras
Exchange
DeliaS.Romero.GalicanoA. Codes,
NecltaZ. Aquino and FedericoD. Ulzame
CirculationandSubscription
jane C. Alcantara
Lay.outandDesign
.

-',

DEVELOPMENT
RESEARCHNEWSisa bi.monthly
publication
ofthePHILIPPINE
INSTITUTE FOR DEVELOPMENI_STUDIES(PIDS). It highlights
the findings
and
recommendations
ofPIDSresearch
projects
andimportant
policyissues
discussed
duringPIDS
seminars.
PIDSisanonstock,
nonprofit
government
research
institution
engaged
inlong-term,
policyoriented
research.
Thispublication
ispartoftheInstitute's
program
to disseminate
information
to promote
theuseofresearch
findings.
Theviews
andopinions
expressed
herearethoseoftheauthors
anddonotnecessarily
reflect
thoseoftheInstitute.
Inquiries
regarding
anyofthestudies
contained
inthispublication,
or any
of the PIDSpapers,
as wellassuggestions
or comments
are welcome.
Please
address
all
correspondence
andinquiries
to:

Thefiature ar_ide in this issue by

Uniw_sity of the Philippines Schoolof
Er_v_
(UPSE) ]_of_sor _perto P
Alo_ andante
._L_v_t V_7_rr_
San Pedro discusses the current

Research
InformationStaff
Philippine
Institute
for Development
Studies
Room304,NEDAsa HakatiBuilding.
106Amorsolo
Street,Legaspi
Village
1229Makati
City,Philippines
Telephone
Numbers
892-4059
andB93-5705
TeJefax
Numbers
(632)893.9589
and816-1091

government for the indus_ will con_n_ to be b_n_J

to the co_u_
and the indml_/ _ a whole.
The other arvicle in this im_e is writ-

E-mail
Address: jliguton@pidsnet.pids.gov.ph

ten

Philippine Telecommunications..
Po_/J

ready concentrated.
The less populated areas will not be as attractive to
operators. As the sector becomes more
crowded, mergers and acquisitions of
a few remaining big players are foreseeable scenarios in the next few years.
Government must not rely solely on
the information fed by major players,
Rather, it must have a source of infermarion that is not only independent
and reliable but also one step ahead of
industry players so that it can monitor
and anticipate
possible unfair trends
trade practices
and uncomperitive
strategies.
It must set the direction
the telecommunications
sector as ofa
whole with the consumers in mind. It
must likewise forecast alternative future scenarios in response to firm
mergers and thereupon formulate appropriate policies,

te_c_unica_ons s_
in thecountry and enumerates the problems that
plague the industry. The paper also recom_
measures to ensure that the
market

Straightening kinks in the

nnection
problem. The di-

lemma of interconnecting
telecommunications
companies
should be resolved. One response has been through
the 1995 NTC directive which assigned
three-digit access codes to all telecommunication players. The NTC believes
that this will guarantee no special
treatment to any particular firm.
O

A second backbone

reforms

initiated

by the

by PIDS Research Fellow Dr.

Cris_ Da_L It boks inw the _rm-

Re-entered
assecond
class
mail
attheMakati
Central
PostOffice
onApril27,1987.
Annual
subscription
rates
are:8150.00
forlocal
subscribers;
andUS$20.00
forforeign
subscribers.
All
ratesareinclusive
ofmailing
andhandling
costs.
Prices
maychange
withourpriornotice,

interc

_,_ P_

for the

country. Putting up a second telecommunications

backbone will provide
additional trunk capacity, universal access and interconnecrion. The implications, however, include competition in
local service for PLDT based on effi-

_ projections made by Lester Brown

regarding the declining cerealproduction of China which is said to create a
global food c_sis in the next century.
David, however, cites several studies
which contradict Brown's allegations
and says that the current concerns on
the food production condition actually
stemmed from severalfactors such as
dcdining per capita and quality ofland
and water resources.
FolLowingthe Food and Agricul_ure
Organization's
(FAO) definition,
David looks into the issue of food secu_ty not from the standpoint offood pro-

duc_n levels per se lrut rather in the

context of economic growth rate and
dhtri_rion ofincome within countries.
Food security is thus one issue that will
be conctantly tackled in forthcoming
srminars and amfirences related to the
Asia-Pacific Economic Cooperation
ciency in service. @
(APEC) and the General Agreement
on Tariffs and Teade (GATT)-World
Selected References
_
Organization (WTO).
Fortuna,
Marlcon.
"Telecommunications
Industry:
WIrlngthe Philippines.'In Ma_atl Business
Club Economic Papers,Volume14, No.6
(Juno
1994).
Service
Reyes,Ma. Angola."ThePhilippine
Telethrough Research
communicationsindustry:Deregulation
Pains." Center for Research and
Support
Communications
StaffMemos(No.6,1993).
NationalTelecommunicationsCommission.
Philippines 2000
AnnoolRepo# 1995.