The Philippine economy rising
CROSSROADS TOWARD PHILIPPINE ECONOMIC AND SOCIAL PROGRESS - Gerardo P. Sicat (The Philippine Star) - October 16, 2019 - 12:00am

Over the weekend, I was in receipt of a book that was published last year, titled “The Philippine economy: No longer an East Asian Experience?”

“A cautiously optimistic book.” The book is the product of a collegial effort by economic scholars to reassess the Philippine economy since the country suffered a devastating economic and political crisis that led to People Power at EDSA.

Consisting of eight major articles written by 16 scholars, all of whom have strong credentials, the book reviews the landscape of Philippine economic development challenge for the future. The authors are mainly from the UP School of Economics and scholars with strong ties to it.

Edited by Ramon Clarete, Emmanuel Esguerra and Hal Hill, it was published in Singapore by the ISEAS Yusof Ishak Institute, which was formerly known as the Institute of Southeast Asian Studies.

Drs. Clarete and Esguerra are established senior professors at the UP School of Economics who have written distinguished studies. Dr. Hill is the distinguished professor well-known for his work on Southeast Asian development at the Australian National University.

The book is a sequence of coordinated studies around the theme of reform, economic catch-up, and sustainable economic growth starting from 1990.

Each essay is described or discussed through an array of statistical information. An important side-story is the comparative framework with other countries in the region. Thus, the Philippines gets a chance to be compared statistically and with the help of qualitative social indicators, especially with other ASEAN neighbors. There is an opportunity to gauge the nature of the catch-up gap and the depth of the challenge for policy makers and planners.

The topics covered in the study are, to wit: (1) economic growth and poverty reduction; (2) infrastructure and urbanization; (3) education and human resources; (4) universal health coverage and implementation; (5) environment; (6) energy security and regulation; (7) development finance; and (8) governance and institutions.

An “overview” essay, written by the editors, takes a longer time-perspective and reviews episodes of economic development dating to the 1960s. The beginnings of the problems of development had their roots on the highly protectionist industrial regime of trade and development that was enmeshed within a highly oligarchic structure that further fostered a narrow economic development over time.

The volume was written “to pose the question, has the Philippine economy rejoined the dynamic East Asian mainstream and, if so, what sets of policies and priorities are required to maintain the strong economic momentum of recent years?”

“A daunting but feasible agenda.” The overview essay correctly points out that the presidency of Fidel Ramos delivered “a period of reform, political stability and growth.” This started the trend of improved economic policy-making to sustain the growth path through the Gloria Macapagal presidency, which was partly marred by some instability. By the time of the Benigno Aquino administration, the country experienced the highest six-year stretch of annual growth ending in 2016.

There was therefore a celebratory mood of the country having joined the mainstream high growth countries in East Asia. The problem then was, simply, to sustain this growth and remain with the mainstream.

The long-term economic agenda, as the book’s introductory overview states, is daunting but feasible. How to achieve growth with less inequality. How to make cities functional and more livable. How to regain the educational advantage the country once had. How to deliver broader and more efficient public health outcome. How to address environmental fragilities with growth. How to improve energy security and regulation. How to sustain growth with development finance. And how to improve the governance institutions and promote equitable growth.

It is not uncanny that these topics are important areas within the framework of coverage of the national development plan.

“In the high growth mainstream and on its own.” This book was completed during the beginning of the Rodrigo Duterte administration, when the dominant news about it was the drug war and the implications on human rights.

Will the present trajectory of the Philippine economy be sustained? Below, I add my own answer to the main question of the book.

Of course, there are risks in making predictions and judgments. Contrary shocks or events could cancel out judgments. For lack of space, I focus on the bright picture concerning development finance and on delivering infrastructure investments.

In mid-term, President Duterte has already delivered major economic reforms that even prior recent presidents cannot match. His decisive leadership on economic matters is exercised through his great support of his economic team.

He has delivered on tax reform much more quickly and substantially than any previous president had achieved recently. This has increased the leg room for public spending on growth and to sustain and to leverage the finance of the major infrastructure projects that the nation needs.

He is about to undertake a major reform of the investment incentives program so that investment and tax incentives could produce responsible revenue growth.

The decision-making speed with which he arms himself is a big contrast to that of Benigno Aquino, his immediate predecessor, who was known to be too careful and too paralyzed to make decisions on major projects.

As a result, many infrastructure projects that awaited decisions during Aquino’s time have moved forward and were started under Duterte. In addition, there are more private sector-initiated projects predicated on partnership with government in the infrastructure building program.

The government’s Build Build Build program across the country includes many projects that will link the nation’s many regions. Many of these are in transportation, airports, and public works located not only in Luzon, Mindanao and the major islands. The participation of the private sector in these projects have speeded up implementation. Finally, Duterte ended the long debate on where to construct a major international airport into the country by locating it in Bulacan and approving the project.

In Metro Manila, even as the traffic gridlock continues, the future is seen. In places where the major projects are under construction, we see progress in the works. The connector roads and mass transport projects which were delayed and therefore un-implemented in the previous periods are on track to be finished. The subway project to help move large amount of commuters within the city is about to start, with the development assistance from Japan.

These are indications that the Philippine economy is rising, and is in the mainstream of growth and forward motion.

My email is: gpsicat@gmail.com. For archives of previous Crossroads essays, go to: https://www.philstar.com/authors/1336383/gerardo-p-sicat. Visit this site for more information, feedback and commentary: http://econ.upd.edu.p h/gpsicat/

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