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Has the Duterte administration made us a stronger nation?

THE CORNER ORACLE - Andrew J. Masigan (The Philippine Star) - April 28, 2021 - 12:00am

Presidential spokesman Harry Roque and the Presidential Communications Office (PCO) have been selling us the narrative that the Duterte presidency is performing excellently. They want us to believe that the nation is better off today than it was during the end of the Aquino presidency. These claims are reinforced by social media trolls.

I would like to believe the propaganda. After all, who would not want the country to be on a steady path of improvement? With this in mind, I put the claims to the test by utilizing the medium of measure no one can refute – statistics. By comparing economic data and development indices derived from global institutions like the World Bank, we can tell, with a degree of certainty, if Roque and the PCO speak the truth. And to be fair, I measured government’s performance based on pre-COVID data (2019 statistics) so the pandemic cannot be used as an excuse for poor performance.

For this comparison, I will not even tackle foreign relations and the manner by which China’s territorial grab is being handled. This deserves a column on its own. Rather, this piece will focus solely on various development indices and the state of the economy because these affect our quality of life.

The World Economic Forum’s Global Competitiveness Report measures economies based on their overall competitiveness and ability to provide prosperity for its citizens. The Philippines peaked in 2015 when it was deemed the 47th most competitive economy among 138 nations. By 2019, the country’s standing plunged to 64th place.

In the World Bank’s Ease in Doing Business rankings, the Philippines was in 95th place out of 189 countries evaluated in 2015. Our position deteriorated to 124th place in 2018 before improving to 95th place in 2019.

In Transparency International’s Corruption Perception Index, the Philippines was adjudged the 95th most corrupt country among 168 nations in 2015. By 2019, corruption perception escalated dramatically and our standing plummeted to 113th place.

The World Economic Forum’s Gender Gap Report measures gender equality. The Philippines has always been a global leader in this field, having been ranked the 7th most gender neutral nation in 2015. Our position deteriorated to 16th place in 2019 due to the growing sentiment of misogyny.

The Global Innovation Index measures an economy’s capacity to harness technologies to produce goods and services in a cheaper, faster or better way. The Philippines was in 83rd position in 2015 and improved to 54th position in 2019.

The World Economic Forum’s Global Information and Technology Index measures future readiness of economies. The Philippines was in 77th place in 2015, falling to 80th place in 2019.

The WJP Rule of Law Index measures a country’s performance in upholding fundamental rights,   national security, regulatory enforcement, civil and criminal justice. The Philippines was in 51st position, out of 113 countries in 2015. Our ranking sank to 90th place in 2019.

There are other development indices but space inhibits me from including them. Suffice it to say that the majority tell the same story of deterioration.

As for the economy, the Duterte administration has been able to sustain the economy’s growth momentum. Gross Domestic Product (GDP) grew by an average of 6.5 percent from 2012-2015. The same pace was sustained from 2016 to 2019. The difference, however, is that growth accelerated during PNoy’s last fours years, peaking in 2016 at 7.1 percent. It decelerated from 2017 to 2019.

Foreign Direct Investments (FDI) has been on a uptrend since 2010, peaking in 2017. It has also been declining since then. The decline is attributed to the President’s animosity towards America, which caused many IT-BPO companies to locate elsewhere. This was exacerbated by peace and order concerns due to the war on drugs, delays in tax reforms and the usual disincentives such as expensive power cost, among others. The President banked on a deluge of investments from China in exchange for one political concession after another – but this never materialized. Feisty Vietnam and uncompromising Indonesia secured the lion’s share of Chinese investments.

The Duterte administration relied on infrastructure spending to drive the economy. It spent well over 5 percent of GDP on public works from 2016 to 2019, something the country badly needed and will benefit from. It must be highlighted, however, that underlying Build Build Build is a strong fiscal position. Fortunately, the last administration left the nation with cash and cash equivalent reserves of $84 billion, a debt-to-GDP ratio of only 42.1 percent, a revenue base of 15.2 percent of GDP and an investment grade debt rating. This allowed the current administration to borrow and spend massively. The infrastructure blitz could not have been possible without prior fiscal prudence.

What is truly regrettable is that no new manufacturing industries were developed during President Duterte’s term. In fact, the few sectors that were struggling were left to die – garments and footwear manufacturing are among them. Only once in the last five years did the growth of manufacturing outpace the growth of services. This was in 2017. In this administration, infrastructure development was made the solitary driver of the economy. Unfortunately, this is not sustainable.

As a result, the country has become dangerously dependent on imports for nearly all its needs, including food. Although our merchandise exports increased marginally from $58.64 billion in 2015 to $70.92 billion in 2019, our imports shot up disproportionately. Our trade deficit ballooned from a manageable $11.5 billion in 2015 to a whopping $46.3 billion in 2019. OFW remittances fill the gap.

So, was the economy stronger in 2019 compared to 2015? Yes and no. Yes because the economy grew at pace, infrastructure improved and so has per capita income, unemployment and poverty rates. No because our manufacturing industries have turned alarmingly weaker, our trade deficit is bordering on the danger zone and the country remains unattractive to foreign investors. All these make for a fundamentally fragile economy.

The nation has turned from promising to underachieving even before the pandemic hit. The country is less competitive, our institutions are weaker and the integrity of the rule of law has eroded. Worse, corruption is back with a vengeance.

What is even more worrisome is that we can no longer count on government to do what is right, what is moral and what is democratic. Experience has taught us that Malacañang’s decisions are often laced with distorted personal biases, simplistic thinking and political considerations. So, no, I cannot buy into the propaganda.

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Email: andrew_rs6@yahoo.com. Follow him on Facebook @Andrew J. Masigan

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