Reality check
DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - July 15, 2019 - 12:00am

In a way, it is par for the course to have senior government officials to give very optimistic projections of our country’s future. Except sometimes, I expect respected economists like BSP Gov. Ben Diokno to at least hedge a little.

Managing expectations is a good thing. In my many decades of experience in the voodoo art of public communications, the last thing I want to hear is a reaction exclaiming “press release lang yan.”

This is why I personally warned Gov. Ben, when he was still budget secretary, not to be too exuberant about the administration’s ability to deliver on Build Build Build. Three years after, and my fears have been validated.

They are only just starting to break ground on some of the projects. They are sustaining public interest simply by issuing more press releases and ceremonial ground breaking that do not really result in actual construction.

The Duterte economic managers who claimed the superiority of ODA financing over PPP, have found out it is not that easy but are just too proud to admit their mistake. The big ticket China-funded BBB projects are nowhere near starting date. The only projects they are inaugurating were initiated by the previous administration.

Nothing wrong there. Continuity of projects through administrations is desirable. Indeed, the Duterte managers could have inaugurated more projects over the last three years, if they didn’t junk some NEDA approved projects to upgrade NAIA and a bundle of airports in the south.

Economic managers have also been talking loudly about a seven to eight percent economic growth up until the economy buckled a bit over high inflation last year. Then Congress didn’t pass this year’s national budget on time, and not even election spending could save the growth numbers.

Gov. Ben is now talking of eight percent GDP growth by the end of Duterte’s term. But he says, “we remain optimistic about meeting the GDP growth target of six to seven percent for this year.”

Last week, an economist from the Ateneo Center for Economic Research and Development (Acerd) said that our economy is not built to post a growth of seven or eight percent.  

Director Alvin P. Ang said, “You cannot expect a 1300 engine car to run like a 2500, so don’t dream that we will grow seven percent every time because the engine is not built for that yet. We are still getting this infrastructure to run.”

But Ang acknowledged, “The Philippine growth story is intact, that’s a fact, albeit at a slower speed… investments are needed to meet the targets of the Philippine Development Plan.”

Ang sees the economy growing by an average of only 5.9 percent this year. This is a downward revision from the Acerd’s earlier projection of 6.2 to 6.5 percent. He said that anything more than this could overheat the economy.

“If the government can assure that all the priority bills (are) passed on time, maybe the economy can grow faster, but not sustain a seven percent growth,” Ang told Business Mirror.

Ang also warned that OFW remittances are already plateauing, implying the need to develop other sources of growth in the coming years. Remittances growth, Ang said, would likely average three percent this year, a far cry from the double digit growth of as much as 20 percent in the past.

Economist Ciel Habito pointed out that “industry leaders no longer see the earlier set revenue goal of $40 billion (in OFW remittances) by 2022 as realistic after barely earning $25 billion last year.”

Agriculture is an obvious sector that could use an abundance of government attention and resources. It also needs more private sector investments.

Government also needs to put more effort in addressing airport and traffic congestion, especially in Metro Manila; the water crisis; slow internet; corruption; large housing backlog, among many others.

It is just as well that the Ateneo economist brought the discussions on the economy down to earth. It led Finance Assistant Secretary Antonio Lambino II to admit during the same forum that growth is not the end-goal of the Duterte administration, but reducing poverty and creating opportunity.

Asec. Lambino said that priorities for the remaining three years are the Build Build Build and the passage of the remaining tax-reform packages, as well as increasing investments and jobs.

In this regard, Lambino claims they will fasttrack BBB by addressing land valuation reform to resolve right-of-way conflicts and implement proper zoning through National Land Use Plans nationwide.

In the meantime, I suggest that they come clean with the status of projects and not claim completion when a lot more things have to be done. Take the Bohol Panglao International Airport as example.

It was inaugurated with a lot of hoopla, but it is not quite complete. It still has to comply with ICAO standards before international flights can start bringing in tourists.

Panglao Airport has adequate navigation and ground facilities to accept wide body aircraft both flying visual and instrument. But they are still testing air navigation equipment, including the ILS that underwent systems calibration and integrity and reliability checks. Flight checks have been completed and the results/data are now being use to design flight procedure.

They expect Panglao Airport to be fully operational to all flights by October. Airlines would, by then, have information needed to make the necessary flight computer set up in their aircrafts to be able to operate in Panglao Airport in adherence to international standards set by ICAO.

If they managed expectations by explaining the technical stuff that still needs to be done at Panglao, people can be more understanding of the delay in full operations.

But there is another concern. Unless Panglao airport is turned over to competent private management, it may suffer the fate of Laguindingan airport, also a brand new airport that quickly deteriorated.

Those are a few good examples of reality checks. Credibility is lost by over promising. This happens when essential truths are omitted in a misguided attempt to prematurely look exceptionally good.

 Boo Chanco’s e-mail address is Follow him on Twitter @boochanco

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