Trickling down, that’s the primordial objective of the administration in the remaining years. How do you translate the remarkable growth rate to real development that will be felt by the people, significantly making a difference to their day-to-day lives? And so this is the outline of this Monday’s State of the Nation Address. While we write this piece a day before the actual delivery, many expect the tone of the President’s speech along this line.
Economic growth has become a reason for jubilation. Since 2010 we have received at least 9 credit ratings that now, leading international credit ratings agencies see us just one notch below investment grade. The biggest cause of administration pride is the 7.8 first quarter economic growth from an already considerable 6.8 per cent last year. Apart from construction boom, what else is the driver of this growth has remained largely contestable. While this writer is not an economist, last year’s growth, including the unprecedented first quarter growth rate is explained primarily by the recently concluded elections. Growth remains consumer driven, and especially during elections, seasonal demand increases employment, production and consumption. The point is, unemployment remains at a remarkable 4-year high of 7.5 percent and interestingly, poverty, compared to the first semester of 2006 at 28.8 percent and first semester of 2009 at 28.6 percent, the first semester of 2012 is at 27.9 percent, still largely unchanged. These poverty figures come from the National Statistical Coordination Board (NSCB) report, which was subsequently disputed by Malacanang citing overall income increments and the 3.2 percent inflation rate. If we are to analyze figures side by side however, the poverty incidence, despite the many programs of government still sticks out like a sore thumb.
Despite the parrying of Malacanang, the rosy picture painted by the credit ratings and exceptional economic growth rate, international organizations remain unconvinced. What is considerably lacking is inclusivity that has led the World Bank (WB), with no less than the Vice President for East Asia and the Pacific, Mr. Axel van Trotsenburg, and the Mr. Takahiro Sasaki, Chief Representative to the Philippines of the Japan International Cooperation Agency (JICA) to call the government’s attention. What is needed is a considerable increase in employment, which will require more investments. Where these needed investments will come from is of course the more difficult question. If we are to look at the United Nations Conference on Trade and Development (UNCTAD) 2013 Investment Report, the Philippines remains a laggard that despite the so-called remarkable economic growth recorded only less than $3 billion worth of Foreign Direct Investment (FDI) compared to our neighbors. Vietnam and Thailand, our closes competitors both registered more than $8 billion while Malaysia has $10 billion.
What to do, if at all something will be done is the fundamental question. Something will be done of course but whether this is the right pill to what appears to be a chronic disease is another question. The administration refuses to consider opening the constitution for revision, even only limiting changes to the economic provisions, even only making the state’s economic policy “silent” and therefore dependent on legislation. Of course, when pursued, one will say, but precisely the problem is our institutions, how can we trust the legislature to craft the right economic policy thereafter? Then it ceases to be an economic question; ultimately it is a political question. What can be done so that ultimately, the state and our government develop a standing that will result to the people’s faith and respect? It will require a full system change, a shift from Presidential to Parliamentary and, recognizing the inherent social economic and even ethnic diversity in the country, changing the unitary to a federal form and of course, opening up of our economic system; what many have already advocated since the 60s starting with Claro M. Recto, revived in the failed 1971 constitutional convention that resulted to a dictatorial government and again in 1992 with former President FVR. Then President Erap with the same failed result again attempted revising the economic provisions. Now, even before substantive discussions, PNoy, even before the 2020 elections have rejected calls to change “his mother’s constitution.” What will happen to the resolution filed by Speaker Sonny Belmonte and even the more ambitious version of Rep. Rufus Rodriguez of Cagayan De Oro remains to be seen. Many say that if the President is left with not choice, especially with the MILF Peace Agreement requiring a revision of the Constitution for it to succeed, then it might just have a chance.
The point is, what can be done in this light that systemic change, revising the 1987 Constitution does not happen, what is the alternative of the administration? Considerable advocacy has already been used to push for the political party development law and the competition law. And in the case of making sure that development initiatives are adequately implemented to the local level, reforming the 1991 Local Government Code. One has to review the President’s pronouncements whether any of these has been offered. Unless this writer simply failed to gather it from news reports or official documents, unfortunately none of these is in the pipeline.
Ultimately, we need resources to develop our infrastructure, make it an integrated efficient system addressing not only mass transportation but also traffic. We need capital to improve on public utilities, i.e. water, energy and telecommunications, even media. If we cannot have enough FDI to fill up these needs, how are we to address it? The answer of the government is public-private partnership (PPP). Much has been announced since 2010, but unfortunately it has yet to bear significant result.
Trickle down. What else will the government do in the next three years? This is what we’re supposed to hear from this Monday’s SONA and find out how the government works in the near future. Time is running out fast and the countdown to 2016 is not 3 years but effectively 2 years because of political realities. So far, if political stars don’t change, we will still see more of CCT and hopefully better PPP. These are after all, the centerpieces of the administration. Better PPP hopefully dramatically improves the country’s infrastructure system as more airports are needed, integrated mass transport system, i.e. interconnecting the light and metro rail systems in the metro, and aggressively revitalizing the train system connecting the north and southern Luzon, including better ports system that hopefully includes cheaper cost of transporting goods across the country. This brings us back to our previous problem, if there are enough capital, possible investments that will link this country divided by bodies of water. That is the least, but literally a tall order.
Better infrastructure alone will require better revenue for government, explaining the aggressiveness of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). All these will still not be enough. Reforms would still be needed explaining the attempt to re-organize the BOC. The BIR proves to be a tougher nut to crack. We pay the highest tax rate in the region but the actual collection remains less by way of proportion. And yet, we don’t hear any talk of reorganization or new legislation for BIR.
The legislative support of the administration is bound to change in its last year in office. Of course, it may probably for the best that this support is sustained even beyond, but the preparations made in the last 3 years have not been enough. There had been reforms, the increase in sin tax law and thus more funds for health and the much trumpeted passing of the RH Law and of course the forging of the kto12 education program. All these however are not institutional reforms. Kto12 could qualify as institutional reform, but so many issues that come with it may simply wear it down and even pose more problems than it purportedly address. And so we still have to wait and see.
The good news is, the President remains popular. Whether this remains until his last day in office however, will just be another wasted opportunity if no institutional reform is successfully pushed.