Sen. Panfilo Lacson, chair of the Senate national defense and security committee has urged the government to prepare for a possible economic fallout as a result of the war between Ukraine and Russia.
He warned that an invasion of Ukraine may adversely affect the stock markets all over the world and prices of basic commodities and fuel may increase.
Prior to Russia’s announcement of the invasion of Ukraine, Trade and Industry Secretary Ramon Lopez said growing tension between Russia and Ukraine was likely to have minimal impact on Philippine trade.
But he emphasized that it will cause disruptions in global supply and prices of oil.
What Lacson and Lopez forecasted on global oil indeed happened.
After Russia invaded Ukraine, prices of the global benchmark Brent crude oil soared past $100 a barrel for the first time in more than seven years. Brent crude futures surged to $102, while Dubai crude, the reference price for the Asian market, was more than $91 per barrel.
Russia accounts for 12 percent of global oil and 24 percent of natural gas production. The Department of Energy (DOE) said that the Philippines does not buy oil directly from Russia, however, its trading partners such as China, South Korea, and Japan purchase it from Russia.
The DOE further said that the Philippines could suffer an indirect hit in case of oil supply disruptions as a result of the war.
The Observatory of Economic Complexity (OEC) data showed that Russia exported crude petroleum to the Philippines, amounting to $96.2 million. DOE said that the country imports 77.4 percent of its gasoline, 80 percent of its diesel, and 84 percent of its kerosene needs.
One of the immediate impacts of war in Ukraine was on pump prices of petroleum products in the country, and experts warned that this could lead to even higher local pump prices.
High pump prices caused by increasing global oil prices could also impact transport fare, Bangko Sentral ng Pilipinas (BSP) said.
Various groups, sectors, and lawmakers in the country appealed to President Rodrigo Duterte to call for a special session of Congress for the purpose of suspending the tax on oil for at least six months, in a move to cushion the ordinary consumers’ impact on oil prices.
The war likewise impacted global supply and prices of agricultural commodities, like wheat and soybean—among the products imported by the Philippines from the two countries.
Among the government’s move to cushion the impact of the Russia-Ukraine war amid the rising prices of oil and agricultural commodities, is the allocation of P3 billion in subsidies.
The Cabinet-level Development Budget Coordination Committee (DBCC) said in a statement that they are ready to provide relief assistance. They are preparing to release P2.5 billion for the Fuel Subsidy Program of the Department of Transportation (DOTr). The purpose is to provide fuel vouchers to over 377,000 qualified drivers operating jeepneys, UV express, taxis, tricycles, and other full-time ride-hailing and delivery services nationwide.
A separate P500 million was also allotted to the Department of Agriculture (DA) to provide fuel discounts to farmers and fishermen to help mitigate the impact of rising fuel prices on agricultural production and transport costs of Agri and fishery products.
The DA through the Bureau of Fisheries and Aquatic Resources (BFAR) has announced that it has earmarked P250 million for transport assistance for fisherfolk. Currently, they are developing guidelines for its implementation to immediately distribute assistance to our fishermen.
Our government could have made significant relief measures to Agri and fishery sector by transporting food products by the use of government resources such as ships, planes, and other available assets.
The spiraling prices of basic commodities and agricultural products were also mainly due to very high transport costs.
Imagine, trucks carrying bananas, carrots, potatoes, and other products from Mindanao are stranded in Nasipit port in Surigao for several days because private cargo ships were unable to prioritize them to traverse to Liloan in Southern Leyte and another cargo ship to cross Allen town in Samar going to Matnog, Sorsogon. Therefore, the difficulty of transport of products from Mindanao going to Metro Manila definitely causes the prices of Agri products to spike.
The government should come to the rescue. Or better, the government should directly buy products from our farmers, removing middlemen.