What are our economic & political prospects in 2018?

I believe the Philippines is entering a most exciting and totally new era of faster economic growth and bold socioeconomic reforms, the likes of which we haven’t seen in years, and which I’d describe as “Dutertenomics.”

Whether you like our president or not, Duterte is presiding over our fast-developing economy with a combination of strong political will, massive government spending on infrastructure and social services, and fiscal prudence, as seen in his successful push for the TRAIN tax reform law.

Various local and foreign media have interviewed me almost daily since the New Year asking for my analyses of the Philippines’ economic and political prospects in 2018. Even a top Singaporean investment firm interviewed me on the overall economic and political outlook of the Philippines, often zeroing in on our colorful, strong-willed, reformist, controversial and bold President Rody R. Duterte.

Here are some of my analyses and views:

• We’ll be seeing the highest Philippine economic growth this year. Firms big and small, professionals, retirees, and overseas Filipino workers should be optimistic and seek to ride this rising tidal wave. Many businesspeople I’ve informally surveyed agree 100 percent with First Metro Investment Corporation (Metrobank Group’s investment arm) president Rabboni Francis Arjonillo, who announced that, according to their study, our Philippine economy will outshine the ASEAN 5’s — Singapore, Thailand, Malaysia, and Indonesia being the other four — with economic growth of as much as 7.5 percent.

I hope this record-high Philippine economic growth will not only enrich our existing elites and urban middle-class with booming stock and real estate market prices, but all sectors should be vigilant and work towards genuine inclusive growth, economic democracy and sustainable development. Let us also focus on quality of life and equality of growth, not just be blinded or fixated on fast-growth statistics. 

• This is a new golden era for small businesses. President Duterte, his Trade Secretary Mon Lopez, Department of Science and Technology (DOST) Secretary Fortunato de la Peña and his presidential adviser on entrepreneurship Joey Concepcion are all bullish on pushing more support for micro-, small- and medium-scale enterprises (MSMEs). The unprecedented booms in the tourism and construction industries will boost the expansion of businesses and new jobs, from agriculture, foods, basic transport, food and beverage, to entertainment, resorts and hotels, service industries, and professionals. Can Philippine banks act less like pawnshops and be real lenders to SME entrepreneurs?

• Tourism will experience unprecedented growth. Three factors are going to make 2018 a great year for Philippine tourism: the drastic improvement in nationwide peace and order; the success of the Philippines’ independent foreign policy, wooing new huge and affluent tourism markets like China and Russia; and the upgrading and construction of better airports, seaports, access roads and telecommunications all over our archipelago. More far-flung yet naturally beautiful isles and rural regions of the Philippines can open up to foreign and domestic tourists.

With regard to this, let us improve our kindness, honesty and efficiency in services towards tourists and balikbayans. Don’t gauge or take advantage of them for shortsighted, short-term gain, which might give negative impressions of the Philippines. Let us compete with Thailand, Malaysia, etc. as the next tourist mecca!

• Consumer prices will increase. The moderate rise in inflation is a challenge to government, businesspeople and consumers, so all of us should work together and more efficiently to make the prices of basic goods, foods and services as stable as possible.

• The construction boom will be a catalyst for growth. The government’s visionary and unprecedented “Build, Build, Build” infrastructure projects will definitely spur a huge construction boom, which will create many new jobs and business opportunities for numerous allied, related and even unrelated industries. Let us already prepare to cash in on this gargantuan construction boom, which is now the envy of other Asian and Western countries.

• Foreign direct investments (FDIs) will boom after Charter change on economic provisions. Even during the presidency of Noynoy C. Aquino, the heads of the Senate and House of Representatives like Senate President Juan Ponce Enrile and Speaker Sonny Belmonte were already open to the call of various sectors to amend the 1986 Constitution, especially its economic provisions on foreign investments. Now in 2018, both chambers of Congress and President Duterte are said to be open-minded about finally updating and modernizing our constitution, hopefully relaxing our overly restrictive foreign investment rules to make them competitive with our ASEAN and Asian neighbors.

China and Vietnam are still officially “socialist” countries governed by their Communist parties, but it is very ironic that their foreign investment rules are more welcoming, progressive and liberal than ours. Why? Veering away from their past anti-foreign investor ideology, China and Vietnam have in recent decades become “economic miracles” due in a large part to their welcoming so much foreign direct investments. What is the use of our international credit rating upgrades if every year our Philippine economy lags behind our ASEAN competitors in wooing foreign direct investments? Is 2018 the make-or-break year for much-anticipated charter change, which will finally encourage more FDIs into our Philippine economy, and not just the so-called “hot money” investment flows into our booming stock and real estate markets?

• We should have more inclusive economic development. Duterte calls himself a “socialist,” but will his public spat with former professor and Philippine Communist Party founder Jose Ma. Sison turn him into a Lee Kuan Yew, who mixed the best of capitalism with strong state interventions? Yew increased social services for the poor and public education, with strong state intervention in mass housing and middle-class housing. Will the Duterte government intervene to help equalize economic opportunities by restraining the monopolistic and oligopolistic tendencies of the conglomerates in favor of empowering MSMEs? 

• Let’s revive manufacturing. One of the fastest ways for economic miracles like that of China and South Korea to overcome the age-old challenge of massive rural poverty and inequality was by strengthening manufacturing. Unlike call centers and BPOs, which employ mostly English-speaking college graduates in cities, factories can employ many people even without high school diplomas and thus alleviate poverty and unemployment. Give tax and other incentives to factories and exporters, and boost vocational education centers, from TESDA to private colleges.

I believe the Philippines has a future in manufacturing. Hopefully the government’s Charter change on economic provisions will woo foreign factories to move here, so that government efforts to lower our atrociously high electric power rates will succeed, and that we can streamline our labor policies. Hopefully all these can encourage more local and foreign entrepreneurs to open or expand factories here.

Why should the resource- and talent-rich Philippines forever be a nation of importers and smugglers, while only exporting our skilled laborers and technical talents to sustain the export factories of other foreign countries? I foresee and expect that a key component of exciting “Dutertenomics” in 2018 will be more support for the revival of Philippine manufacturing and exports. Spread the news!

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Thanks for your feedback! Email willsoonflourish@gmail.com or wilsonleeflores@yahoo.com. Follow @wilsonleeflores on Instagram, Twitter, Facebook, and read my blog, wilsonleeflores.com.