A year of waiting

At the start of this year, we warned of the possible adverse effects of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which took effect on the first day of the year. Brace yourself, we had warned while trying to keep  our fingers crossed that nothing too serious would happen to derail economic growth.

Well, were we in for a big surprise as inflation started to rise, rise, and rise. We’ve had worst figures in the past, but what really bothered  this year was the prolonged state that saw levels at an average of 5.2 percent for the first 11 months, way higher than the two to four percent range that government had projected.

For almost the whole year, Filipinos had to suffer high prices of basic commodities when the rest of Asia was pulling in lower numbers. The continued rise in crude oil prices and a weak peso was exacerbated by irregular prices of rice and vegetables.

Thankfully, positive government action in the latter half of the year is now tempering inflation, and should bring better news in 2019. It was a bad case of hiccups during most part the year, but one that has been successfully dealt with.

Infrastructure

The inability of government to deliver on its declared aspirations during the year for more roads, bridges, and ports had weighed in too on the previously bullish go-go-go demeanor of the business sector.

Delays hogged the start-up of many big ticket infrastructure projects under the Duterte administration’s ambitious P8-trillion Build Build Build program, as well as the planned addition of a third player in the telecommunications industry currently dominated by the duopoly of Smart and Globe.

For Build Build Build, the big problem that was causing delays was the processing of actual counterpart funding from countries and multilateral financing institutions that had committed support.

Internally, the delivery of right-of-way permits on existing and new big road-building projects was also contributing to the clogging of the infrastructure timeline.

On the promised third telco, almost a year had passed before a name could actually be formally announced. This again represented delays on a promised reform that would deliver faster internet speed, lower rates, and wider network coverage.

Competitiveness

In the face of such delays, it was not surprising that the Philippines’ competitive rating remained weak, specifically when it came to the ease of doing business, corruption, and infrastructure.

The Ease of Doing Business Act was passed in the first half of the year, but there have been delays in the actual operationalization of the law. Everybody continues to wait for the promise of a standardization of bureaucratic procedures towards reducing the number of days to get government approvals for permits in doing business, among others.

The Revised Corporation Code is all ready for the President’s signature (if he has not signed it yet), and would bring Philippine laws on doing business up to speed with the times.

As Senator Frank Drilon, who continues to work hard so that government can help businesses generate more jobs and income that would add value to the economy, the proposed changes in corporation laws codifies best international corporate practices and addresses the archaic bottlenecks in the areas of starting a business and protecting minority investors. It would also make the corporation code more appealing to startups and entrepreneurs.

Corruption

The proposed new corporation code would also attempt to provide mechanisms to help curb corruption in the Philippines, which has consistently been given a red flag in many international indices on competitiveness. Corruption, without doubt, impedes the efficiency of businesses operating in the country.

While the Ease of Doing Business law is another reform that the government could roll out to curb corruption, more areas could further be improved especially in the disbursement of public funds and the “allocation” of budgets for the different areas of the bureaucracy.

We are about to enter another election year, and so much political noise and maneuverings recently regarding the disbursement of government funds remind us how many of our politicians continue to regard the state coffers as an additional source of campaign funds that could influence voter decision.

President’s rating

If there is any spot of good news that we can cite, it is the President’s continued high approval rating even if there was a sharp one-time drop during the period when inflation was at its highest for the economy across all classes of Filipinos.

With the stabilization of food prices, though, this net trust rating returned to “very good,” a level that he has consistently maintained for most parts of the President’s 30-month stint.

This is an indication that the President, if he wills, would still be able to command the political machinery to follow through with the reforms promised while he was campaigning for the highest position in public office.

While many Filipinos would want to write off 2018 on a negative note, a year that many had expected would continue the strong performance of the country over the past decades, the President’s continued strong ratings in trust polls gives hope of better days during the remaining years of his term.

This year has been a long wait for things to galvanize, but if we could go by the concluding weeks of 2018 and many of the milestones achieved by the current administration during the last two years, the right ingredients may all come together and create the magic we have long been expecting.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.