THE AMBITIOUS PROSPECTS OF PHILIPPINE ECONOMY UNDER DUTERTE ADMINISTRATION TOWARDS AMBISYON NATIN 2040

INTRODUCTION

Let us clarify the title of this essay first. I used economy instead of ecosystem to limit the discussion to that which involve the exchange of money. However, in the final analysis of the Duterte administration’s plans, we will call it an ecosystem, rather than economy, because some developments do not even involve the exchange of money, like the revolution of the Filipino psyche against narcotics, corruption and the like. This development pertains to all dimensions: economic, human and physical capital, institutional, social and cultural.

BACKGROUND INFORMATION

 The present administration inherited a strong economy with high GDP growth and positive ratings from the international community to the point that some renowned economists tagged the Philippines as the rising tiger in Asia according to World Bank. In 2013, Motoo Konishi said “The Philippines is no longer the sick man of East Asia, but the rising tiger. There is macroeconomic stability, and the fiscal situation of the government is sound and improving. The fight against corruption is being waged with determination and it is paying off. Transparency is improving everywhere in the Philippines.”[1]

However, some observers and critics pointed out that this growth is not inclusive so much so that the poor does not feel or experience the rippling effect of such economic growth. And so in his first months as president of a new rising tiger in Asia, Duterte ordered National Economic and Development Authority (NEDA) to craft a new Philippine Development Plan (PDP) for 2017-2022[2] aiming for an economic growth which must be relevant, inclusive and sustainable.

Since November 21, NEDA has been conducting consultations in 17 regions for the PDP that involve representatives from the legislature, executive agencies, local government units, business sector, academe, civil society, and other stakeholders.[3]

This development plan is anchored on a 25-year long-term vision called AmBisyon Natin 2040, a representation of the collective aspirations of the Filipino people, which is a result of a consultative process which began in 2015.

President Duterte’s PDP for 2017-2022 will be the first of the four six-year plans which will also translate his 0+10 Socioeconomic Agenda and the UN Sustainable Development Goals (SDG).

The 25-year vision is stated, to wit:

By 2040, the Philippines shall be:

  1. A prosperous, predominantly middle-class society where no one is poor;
  2. Our peoples shall live long and healthy lives,
  3. (Our people shall) be smart and innovative,
  4. And (our people shall) shall live in a high-trust society.” (EO 5, Sec 1)

It will be a 2040 where Filipinos are strongly rooted (metatag), comfortable (maginhawa) and secure (panatag).

Matatag Maginhawa Panatag
Family is together. Free from hunger and poverty Enough resources for day-to-day needs, unexpected expenses and savings.
Time with friends. Secure home ownership. Peace and security.
Work-life balance. Good transport facilities. Long and healthy life.
Volunteering. Travel and vacation. Comfortable retirement.

 

Source of basic information: A Long-term Vision for the Philippines (http://2040.neda.gov.ph/wp-content/uploads/2016/04/A-Long-Term-Vision-for-the-Philippines.pdf )

Aside from poverty and health, the Philippine Government also aims to triple real per capita incomes where appropriate set of milestones shall be identified to guide the successive medium-term development plans. (EO 5, Sec. 2)

SPECIFIC PLANS

And in order to realize this ambitious vision of AmBisyon 2040, NEDA set out targets and priority sectors for those 4 aspirations.

In ASPIRATION 1: A prosperous, predominantly middle-class society where no one is poor (EO 5, Sec 1)

AmBisyon 2040 can be partly achieved by having competitive enterprises that offer quality goods and services at affordable prices. Government must encourage investments in these sectors by improving market linkages, simplifying government procedures, and facilitating access to finance. These should be complemented by appropriate human capital development, science, technology and innovation.[4] Following are the priority sectors that have direct impact on AmBisyon:

  1. Housing and Urban Development[5]
  2. Manufacturing[6]
  3. Connectivity[7]
  4. Education Services[8]
  5. Tourism and Allied Services[9]
  6. Agriculture[10]
  7. Health and Wellness Services[11]
  8. Financial Services[12]

 In ASPIRATION 2: Our peoples shall live long and healthy lives. (EO 5, Sec 1)

AmBisyon 2040 can be achieved by setting out policies that promote work-life balance. Filipinos must also be given more affordable, clean and safe options for rest and recreation, like open spaces, nature parks and public sports and fitness facilities. In case of illness, Filipinos must have access to affordable and good quality healthcare.

In ASPIRATION 3: Our people shall be smart and innovative (EO 5, Sec 1)

AmBisyon 2040 can be achieved by ensuring that Filipino students acquire the foundational literacies (reading, numeracy, scientific literacy, ICT literacy, economic and financial literacy, cultural and civic literacy).[13]

Formal education system must also ensure that students obtain competencies (critical thinking, problem-solving, creativity, communication, collaboration) and develop character qualities (curiosity, initiative, persistence and grit, adaptability, leadership, social and cultural awareness). This may require a revision of the curriculum content, but more importantly, the mode of delivery. At the same time, there must be access to lifelong learning opportunities so that competencies are continuously upgraded and updated.[14]

In ASPIRATION 4: Our people shall live in a high-trust society.” (EO 5, Sec 1)

A high-trust society allows people to see to their economic pursuits, secure in the knowledge that they will be able to enjoy the fruits of their labor. However, societal ties must be strengthened where every Filipino cares for the plight of his fellow Filipino. Every Filipino must feel upset if another Filipino is found hungry and poor, or unable to recover from unfortunate events.

A caring society does not evolve overnight; it must be cultivated. Venues and opportunities for interpersonal interaction must be provided. But usually, it takes root from building trust in established institutions like government. Government must therefore begin the process of confidence-building by being clean, fair and citizen-centered. After all, a high-trust society is the most durable bedrock for vibrant, culturally diverse, and resilient communities of the Philippines by 2040– hopefully, sooner.

THE 10-POINT AGENDA OF PRESIDENT DUTERTE

  1.  Continuing and maintaining current macroeconomic policies, including fiscal, monetary and trade policies;
  2. Instituting progressive tax reform and more effective tax collection while indexing taxes to inflation;
  1. Increasing competitiveness and the ease of doing business, drawing upon successful models used to attract business to local cities such as Davao, as well as pursuing the relaxation of the Constitutional restrictions on foreign ownership, except with regards to land ownership, in order to attract foreign direct investments;
  1. Accelerating annual infrastructure spending to account for 5 percent of the gross domestic product, with public-private partnerships playing a key role;
  1. Promoting rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism;
  1. Ensuring security of land tenure to encourage investments and address bottlenecks in land management and titling agencies;
  1. Investing in human capital development, including health and education systems, as well as matching skills and training to meet the demands of businesses and the private sector;
  1. Promoting science, technology and the creative arts to enhance innovation and creative capacity toward self-sustaining and inclusive development;
  1. Improving social protection programs, including the government’s conditional cash transfer program, in order to protect the poor against instability and economic shocks; and
  1. Strengthening the implementation of the Responsible Parenthood and Reproductive Health Law to enable especially poor couples to make informed choices on financial and family planning.[15]

 PROSPECTS OF PDP 2017-2022

The strategies of the PDP 2017-2022 form the three pillars:

  1. “Malasakit” or enhancing the social fabric,
  2. “Pagbabago”or reducing inequality; and,
  3. “Kaunlaran” or increasing potential growth.

They are supported by a strong foundation in national peace and security, strategic and accelerated infrastructure development, resiliency, and ecological integrity.

For Malasakit, the social fabric will be enhanced by regaining people’s trust. It involves clean, efficient, and citizen-centered governance; swift and fair administration of justice; and promotion of awareness and value of cultural diversity.

For Pagbabago, inequality will be reduced to make ordinary Filipinos feel change. For each economic sector, it involves expanding economic opportunities and increasing access to these opportunities for sub-sectors and groups that lag behind. For individuals and people groups, it involves reducing vulnerability of the poor and acceleration in human capital development.

For Patuloy na Pag-unlad, potential growth will be increased because it is imperative that growth is accelerated and sustained. It involves promoting technology adoption, encouraging innovation, and maximizing the gains from the demographic dividend or slowing population growth.[16]

NEDA uploaded the draft of PDP 2017-2022 for the public to comment on the plan. Comments will be considered until Jan. 12, 2017. (See the draft of PDP 2017-2022 at http://pdp.neda.gov.ph/)

THE CHALLENGES

The AmBisyon Natin 2040, the 0+10 Socioeconomic Agenda and the PDP 2017-2022 require that INFRASTRUCTURE must be developed. Hence, the Duterte administration launched the biggest infrastructure push in Philippine history to propel economic growth in the next five-and-a-half years.[17] Build. Build. Build.  has been the call of NEDA and other lead infrastructure agencies like the Department of Transportation (DOTr), Department of Public Works and Highways (DPWH) and the Bases Conversion and Development Authority (BCDA).

According to the Philippine Institute for Development Studies (PIDS) 2017 National Expenditure Program, in the first year of the Duterte presidency, infrastructure spending will represent 5.4 percent of the country’s Gross Domestic Product. This will be the highest since the Marcos era spanning 21 years when infra spending was at 3.2 percent of GDP. Among the “game-changing solutions” of the DOTr that guarantee better transport and passenger experience are the Metro Manila Clark Railway which will assure one-hour travel from Metro Manila to Clark International Airport; the Metro Manila Bus Rapid Train System which will yield on-time trips along EDSA; and the Mindanao Railway which will provide the much-needed connection of people and goods across Mindanao.[18]

For its part, the DPWH will build new linkages to ensure better connectivity between key destinations. These include the Santa Monica-Lawton-BGC Viaduct which will directly link BGC going to Ortigas; the UP-Miriam-Ateneo Viaduct which will cut down travel by 80 percent in Katipunan Ave at CP Garcia; and the NLEX-SLEX Connector Road which will reduce travel time to 30 minutes going to Alabang from Balintawak. BCDA also eyes big-ticket projects in Central Luzon and Metro Manila. The Clark International Airport New Terminal Building is envisioned to be a world-class airport which will reduce traffic at the NAIA. BCDA also will continue to build a new city proximate to Metro Manila, a 9,450-hectare smart, green and disaster-resilient city that will be a long-term solution to traffic congestion in main urban centers. Another project is the BGC to NAIA Bus Rapid Transit that will facilitate a 15-minute travel time from Fort Bonifacio to NAIA, preventing delays for passengers rushing to catch their flights whether for leisure or business.[19]

Policy Issues

NEDAs InfraCom for instance highlighted an important area i.e. infrastructure development by accelerating projects in order to boost economic spending however this area is also full of many institutional, legal, and policy issues in relation to infrastructure programs that need to be addressed. For instance, there are necessary amendments which must be carried out in the BOT Law and its IRR, Electric Power Industry Reform Act, and the Water Code of the Philippines. Another area that must be streamlined is the process of investment programming to accelerate infrastructure development. Reform initiatives must also be done on the appraisal and approval process while still ensuring the quality of infrastructure projects.

Foreign Restrictions

In comparison to the other ASEAN-member nation, Philippines is not yet very attractive to investors because of some constitutional restrictions. For instance, the Constitution contains many restrictions targeted against the flow of foreign capital in specific areas of economic activities. Specifically, the restrictions relate to the prohibition of foreign individuals to engage in land ownership, in the exploitation of natural resources, and the ownership of public utilities. Corporations are allowed to participate in these activities only if they have equity ownership only to the maximum extent of 40 percent. In other words, foreign capital can only be a strict minority participation in corporate enterprises to be allowed in these economic activities. These provisions have hurt Philippine development over the years. Despite the liberalization of many aspects of the economy, including those in the area of trade, industry, and other aspects of the economy, these economic restrictions continue to hold because they are part of the Constitutional document.

Aside from those foreign restrictions, the Philippines has been lagging behind its Asian neighbors in attracting foreign direct investments due to poor infrastructure.

Tax Regime

Further, the tax regime of the Philippines is one of the highest in the region in terms of the corporate income tax (CIT) and the so many local business taxes (myriads of them) that need to be dealt with which already border to “extortion.” Furthermore, the overall ease of doing business and the peace and security worsened by the proliferation of the drug problem which has seeped and saturated almost 100% of the all the barangays has impaired the long overdue development that has been lingering in the fringes.

Climate Change

Moreover, the reality of climate change and natural disasters that pummel the regions all year round cost the government huge amount of funds.

All these and many others impede more so hinder the ambitious economic plans under AmBisyon 2040, 10-Point Agenda and the PDP 2017-2022.

However, NEDA enjoins “[a]ll sectors of society, whether public or private…to direct their efforts towards creating opportunities for Filipinos to enjoy a matatag, maginhawa at panatag na buhay. Government, in particular, must use its tools of fiscal, monetary and regulatory policies to steer the development path towards enabling Filipinos to attain their AmBisyon.”

 

[1] See: http://www.philstar.com/headlines/2013/02/06/905371/philippines-asias-rising-tiger-world-bank

[2] The said PDP will be out on Thursday, January 12, 2017.

[3] Next PH Development Plan to Focus on Long Term Aspirations of Filipinos. Available at: http://www.neda.gov.ph/2016/11/28/next-ph-development-plan-to-focus-on-long-term-aspirations-of-filipinos/. (Last accessed: January 9, 2017)

[4] A Long-term Vision for the Philippines. Available at http://2040.neda.gov.ph/wp-content/uploads/2016/04/A-Long-Term-Vision-for-the-Philippines.pdf (Last accessed January 9, 2017)

[5] Construction, construction-related manufacturing, house development-related manufacturing, and utilities (electricity, gas, and water).

[6] Food processing, housing related, construction-related, transport manufacturing, and other manufacturing.

[7] Roads and bridges, port, airports, vehicles, transport systems, and communication.

[8] Formal education and re-tooling services.

[9] Resort, rest-recreation hotels, accommodation, travel and tour cultural shows, heritage sites, etc.

[10] Food production, commercial and industrial crop, agricultural biotechnology, etc.

[11] Primary, secondary, and tertiary care, pharmaceuticals, wellness facilities, sports and fitness facilities, etc.

[12] Consumer financing, enterprise financing, and insurance savings mobilization.

[13] A Long-term Vision for the Philippines. Available at http://2040.neda.gov.ph/wp-content/uploads/2016/04/A-Long-Term-Vision-for-the-Philippines.pdf (Last accessed January 9, 2017)

[14] Ibid

[15] See: http://www.doh.gov.ph/node/6750 (Last accessed January 9, 2017)

[16] Next PH Development Plan to Focus on Long Term Aspirations of Filipinos. Available at: http://www.neda.gov.ph/2016/11/28/next-ph-development-plan-to-focus-on-long-term-aspirations-of-filipinos/. (Last accessed: January 9, 2017)

[17] See: http://news.pia.gov.ph/article/view/2131478178859/build-build-build-duterte-to-launch-biggest-infrastructure-program-in-ph (Last accessed January 9, 2017)

[18] Ibid.

[19] Ibid.

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