^

The pandemic and the economic cha-cha are not separate issues

CROSSROADS TOWARD PHILIPPINE ECONOMIC AND SOCIAL PROGRESS - Gerardo P. Sicat (The Philippine Star) - January 27, 2021 - 12:00am

With the recent move to revive the measure to amend the restrictive provisions of the Constitution, a number of arguments have surfaced to slow it down, nay, perhaps to nip it in the bud.

Arguments raised against economic cha-cha. Today, there is more or less general understanding that the restrictive provisions, if amended, will help the nation improve its economic performance.

But there are many arguments which can be generally classified as political, procedural, or old arguments being offered against the present move.

The political argument, simply stated, is that amending the economic provisions is always hostage to the desire to also amend political provisions, for instance, the issue of term limits or of party-list representation.

In short, it is raised that an economic cha-cha will degenerate into a political cha-cha. The most cogent counter against this is that the administration will only support the economic cha-cha. If it holds to this promise, it will succeed in pushing through the economic amendments.

The procedural argument (which, in essence, is also political) is about proper process, on the legality of the moves in the house, and consequently in the two houses of Congress, to constitute itself (or themselves) as a constituent assembly to pass on the amendments.

The procedural objection would probably die down because, if it succeeds to push the economic amendments through Congress, the administration is willing to submit those amendments to a plebiscite before the people as part of the election.

The old arguments of those opposed to the amendments now appear in many disguises. The direct argument used before was that amending the economic provisions will lead to the sale of the nation’s patrimony to foreigners. This is now crass defense. But it will be whispered here, there, and everywhere whenever there are suspected gullible and uninformed listeners.

The reason for this is that today, among the better informed and among those who feel the pain of missed opportunities for our nation, there is more or less general acceptance that, aside from good economic policies, many of our neighbors have been uplifted by having allowed large inflows of foreign investments into their economies.

Old arguments disguised in other form. So, we find disguised arguments. Old arguments in new clothes.

One variation is the following. The immediate problem we face today is how to deal with the pandemic. The government must focus its energies on solving this grave problem. We must vaccinate. We must get the means to help the people recover with the needed programs of assistance.

A more sophisticated argument runs like this. Changing the economic provisions now will not immediately lead to more investments. The pandemic has caused a world-wide recession and there is little movement of investment flows across countries. Focus on curing the pandemic. Some countries are even protecting their borders and introducing more barriers to investments. The world is de-globalizing.

All these contentions make no sense. If we amend our laws only when the global economy is already recovering, then we will be far behind the curve to take advantage of changing situations. When the global economy has started to recover and the investment flows are increasing again, that is when our country should be reaping the benefits of reforms because we have already undertaken them.

In short, the time to undertake the reforms is when there is a lull in global action, when an economic crisis is in our midst. In this way. when conditions improve, the economic reform can reap the dividends.

Underperformance in trade agreements can be reversed. Further doses of reality can add to national vigilance on the need for the reforms under discussion. If we look deeply into the root causes of these realities, we can trace some of the reasons to restrictive economic provisions hampering our economic achievements.

These are as follows: (1) Of the major and original ASEAN member countries, we are at the tail-end of realizing the most benefits from the ASEAN free trade agreement. Of the original five ASEAN countries, Thailand, Malaysia, Indonesia, and Singapore have gained much more from ASEAN than us. Vietnam, a late-member, has made huge gains. The main reason for our under-performance: our weak foreign direct investment in-take. Some of our foreign investments even moved to these other countries which then export their produce to us.

(2) Recently, we just signed into the expansion of ASEAN within the free trade agreement known as RCEP [Regional Comprehensive Economic Partnership]. This grouping is comprised of ASEAN plus China, Japan, South Korea, Australia and New Zealand. The potential benefits from RCEP, the biggest trading blocs of all in terms of population, will be much larger because of the presence in it of the most aggressive trading economies in the world. How can we maximize the benefits from RCEP when we have not fully maximized our gains from the ASEAN agreement?

(3) According to a recent study at PIDS (Philippine Institute for Development Studies, our national think tank), we have underperformed in realizing benefits from our free trade agreement with Japan.

All the evidence of underperformance can be traced in part to the failure of economic reforms related to the constitutional issue that we are at the moment discussing. A lot of the large improvements in trade and economic production within the ASEAN is related to liberal trading regimes that take place.

Conclusion. The amendment of the restrictive economic provisions of the Constitution should be undertaken now. In fact, it should have been undertaken decades ago.

The inflows of improved and larger foreign investments in the country will be realized in the future if we do this. It will also help us learn more efficient ways to achieve faster progress because we add to our own native resources the ingenuity and technical expertise of foreign factors of production and of progress.

In the present circumstances, economic cha-cha becomes the accelerator of the economic recovery from the ills that the pandemic has wrought on our economy and nation.

 

 

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.ph/gpsicat/

ECONOMIC
Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with