I had the opportunity to serve as one of the discussant in the plenary session of the AmBisyon Natin 2040 Expo held on November 15. President Duterte recently signed Executive Order 5 adopting and approving “AmBisyon” as the country’s blueprint for long-term vision. AmBisyon 2040 is the result of a nationwide study by the National Economic and Development Authority (Neda) on the goals and aspirations of Filipinos on what they want their life to be in 2040. The results were initially shared to the public in March 2016. We have earlier used the findings of AmBisyon in our previous columns on the kind of issues the new government needs to immediately address.
One of the main results of AmBisyon is that an overwhelming majority, or about 79.2 percent, of the respondents aspire for a simple and comfortable life. A question raised by the moderator, Tony Lambino, suggested that this seems to say the aspirations of the majority are too low and, therefore, easy to achieve. However, as the AmBisyon web site itself explains—a simple and comfortable life is actually a middle-class lifestyle. It consists of “having a car of their own, a house of their own, and enough money and savings to send their children to school and to afford leisure, like travel.”
Considering the latest poverty statistics as of 2015, this simple and comfortable life aspiration is not easy to achieve immediately. Poverty rates have fallen from 26.6 percent of the population in 2006 to 21.6 percent in 2015. The per- person minimum income to get out of poverty required an income of P13,357 annually in 2006. This has increased to P21,753 in 2015. For a family of four, which is roughly the average family size in the country, it requires an annual income of roughly P90,000 or P7,000 monthly. For most people living in urban areas, this is a very low amount. But the reality today is that about 22 percent of the population are not even earning this much. Former National Statistical Coordination Board (NSCB) Director General Romulo Virola in his analysis of the 2009 Poverty Statistics showed that about 75 percent of families actually belong to the lower class. It will not be farfetched to assume that a significant number of those respondents belong to this class. In terms of deciles, the 2012 Poverty Statistics reveal that the richest decile has about 10.4 times the income of the poorest decile. The chart also shows that the differences in income from the first to the fifth deciles are actually not far off from each other. These are the same people who possibly are aspiring for the middle-class lifestyle.
How much will it cost for this lifestyle to be achieved? According to the Neda estimates, this is about P120,000. We validated it and found that today, the minimum required monthly income to qualify for a car loan is roughly P40,000 for a P600,000 car payable in five years. Meanwhile, for a modest house valued at P1,000,000, Home Development Mutual Fund (Pag-IBIG) requires at least a monthly income of about P30,000 to pay it in 30 years. Adding education expenses of two children and leisure could easily add up another P10,000 a month. Plus, we need to add savings and taxes to this. Thus, a family of four will need to roughly earn more than P100,000 a month in order to meet the basic qualifications or entry level of this lifestyle. It, therefore, means that we need to increase monthly income of those just above the poverty line 15 times to achieve this today.
This would mean a lot of factors have to change for the country. Our planners and stakeholders have to work together for this. What may be critical is to understand that this cannot be done immediately. Prioritization may be done by phases focusing first on those who are in poverty. Phase 1 must be to ensure that people are getting out of poverty faster. Phase 2 is to ensure that those who have gotten out of poverty must be protected from falling back. Interventions per-income level may be necessary. Those that have gotten out of poverty are usually wanting to reach middle-class status immediately. Data from a World Bank financial behavior study reveal that only about 10 percent of the population have bank accounts. Our own research in rural hometowns reveals that families receiving remittances and those that do not have behave in the same way in regard to savings. Our data show that those who have savings actually keep them at home and most would put them into land and houses rather than in financial assets.
A big challenge, but not necessarily unachievable. We need to work together with the government and other stakeholders to reach this dream. Behavior change and education can help facilitate the process and for the government to make the overall environment conducive for dreamers to achieve.