“Change is coming” is true for all administrations, public or private, because people change, communities change, and so on. For the coming Presidency of Rodrigo Duterte starting this June 30, the main question is “Change for the better, or for the worse?”
This question will covered in the forthcoming
BusinessWorld Economic Forum on July 12, 2016, to be held at the Shangri-La at
the Fort, Taguig City. It will be a big event featuring the CEOs and Presidents
of some of the biggest corporations in the country as speakers.
The afternoon session will feature the topic “The
Philippine Economy Under the New Presidency” and the main speaker will be Mr.
Carlos G. Dominguez III, Secretary, Department of Finance. The two other
speakers in the same panel will be Mr. Ramon R. Del Rosario, President, Phinma
Corporation, and Ms. Riza G. Mantaring, President, SunLife Financial.
Let us briefly review the Philippine’s GDP growth
performance over the last six administrations, from the last six years (out of
20 years in power) of past President Ferdinand Marcos up to the term of the
outgoing President Benigno S. C. Aquino III. Growth figures of the Philippines’
major economies in Asia are also shown to provide a comparative insight about
the overall economic environment during those periods (see Table 1).
The numbers show the following:
1. President Benigno S. C. Aquino III’s administration
has experienced or facilitated the fastest growth of the Philippine economy
over the past 3 decades.
2. From 1980-1997, the Philippines has the slowest growth
rate in the Asia Pacific except Brunei and Japan. Which contributed to the
country’s ugly label of “sick man of Asia” for nearly two decades.
3. China has maintained its average double-digit growth
for four decades until 2010. Growth slowdown started in 2011 until today but
the growth rate, 6%-9%, is still high compared those experienced by many other
countries. India and Vietnam are following its fast growth trajectory, though
at a lower pace of 6%-8%.
Among the ASEAN countries, the fastest growing economies
actually exclude the Philippines. These countries, with their average GDP
growth rates from 2010-2015, are: Laos with 7.7%, Myanmar, 7.1%; and Cambodia,
7.0%. These countries though have low economic base and hence, growth potential
is much higher than countries with bigger economic bases.
But after being an economic laggard for three decades,
the Philippines stood out, posting robust growth. Will the Duterte
administration be able to sustain this momentum, reverse it, or surpass it?
Here are three GDP growth projections for the same 12
economies above, coming from three different institutions. The Economist
forecast is composite for month of their reports are also indicated (see Table
2).
The Bank of Philippine Islands’ (BPI) Global Markets
Commentary, June 2016 issue also showed its GDP growth forecast for the
Philippines from 2016, 2017, and 2018 at 6.2%, 6.3%, and 6.6% respectively, or
an average of 6.4%, much higher than IMF’s projections.
So it appears that the Duterte government will be able to
sustain President Aquino’s economic achievement, especially based on the ADB
and IMF forecasts. The Economist’s pool of forecasts however, sees a slightly
lower growth trajectory. Nonetheless, let us keep the optimistic perspective.
The economic team of Duterte administration has released
the updated “10 Point Agenda.”
1. Continue and maintain current macroeconomic policies,
including fiscal, monetary, and trade policies.
2. Institute progressive tax reform and more effective
tax collection, indexing taxes to inflation.
3. Increase competitiveness and ease of doing business,
relax Constitutional restrictions on foreign ownership except land ownership.
4. Accelerate annual infrastructure spending to account
for 5% of GDP, with Public-Private Partnerships.
5. Promote rural development, agricultural, and rural
enterprise productivity, rural tourism.
6. Ensure security of land tenure, address bottlenecks in
land management and titling agencies.
7. Invest in human capital development, health and
education systems.
8. Promote science, technology and innovation.
9. Improve social protection programs including the
Conditional Cash Transfer program.
10. Strengthen implementation of Reproductive Health (RH)
Law.
These are good programs, especially since they cover
economic liberalization policies and rule of law. Welfarism policies complete
the picture although President Duterte was not known for promising welfarist
policies during the campaign period, he focused on fighting criminality and
corruption.
So, can we expect a “change for the better” or “change
for the worse?” Economically, it appears to be the former. Respecting human
rights is a different matter though and we hope it will not be a change for the
worse because some worrying indicators are showing, more dead bodies of
“suspected drug pushers/drug lords/thieves” are piling faster as June 30 is
approaching.
Bienvenido S. Oplas, Jr. is the head of Minimal
Government Thinkers, a SEANET Fellow and member of Economic Freedom Network
(EFN) Asia.
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See also:
BWorld 61, 100 indicators better than GDP, June 03, 2016
BWorld 64, The WTO and trade agreements, June 17, 2016
BWorld 65, PH exports growth from 1960-2014, June 22, 2016
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