(UPSE Professor emeritus Gerardo P. Sicat was interviewed by Coco Alcuaz on the ANC program Inside Business on a wide range of topics. The salient points of the interview are found in the report by Jon Carlos Rodeiguez below, which first appeared on the  ABS-CBN News website.)


Economist: Govt needs better sense of decision-making

by Jon Carlos Rodriguez, ABS-CBNnews.com
Posted at 10/25/2013 5:54 PM | Updated as of 10/25/2013 6:24 PM

MANILA, Philippines – Economist Gerardo Sicat said government needs to have a better sense of decision-making to solve issues that are weighing down the economy, including the Mindanao power crisis.

Sicat said that while government has been efficient in planning, decision-making gets derailed because of other problems that arise along the way.

He believes there have been delays in solving the power situation in Mindanao due to resistance from local authorities themselves.

“When decisions are delayed, it could be because of a local problem. In the case of Mindanao, the local people were not sufficiently convinced that they could solve the problems without moving to hydro and other kinds of development projects,” he told ANC’s “Inside Business.”

Sicat said Mindanao did not want to be connected to the main grid because of high electricity costs.

“But cheaper power is very unpredictable. Decision-making was delayed along those lines…the local leaders were not moving,” noted Sicat.

He added that personal interests have also become factors in the delay.

“What is needed is to create a sense of direction, a sense of decision-making that moves it from one point to the other. This is the kind of thing that has to be guided by those in the know, the managers of the economy,” he said.

Sicat said officials and stakeholders always had “the luxury to debate” problems, which caused delays in carrying out solutions.

“We keep debating, that’s why we have a problem of not being able to rush the solutions. Whenever we have some good things to do, we always say we can wait,” he said.

Philippine economyWhile the Philippines has recently shown economic growth, Sicat believes there are areas that need much improvement to further boost the economy.

Sicat said the continuous inflow of remittances from overseas Filipino workers (OFW) and revenue growth in the business process outsourcing (BPO) industry have helped the economy to perform better compared to other Asian countries.

“The Philippine economy has been for many years a slow performer and it has been affected by a poor perception by what’s happening in the country. Of course, we had a lot of other problems in the past, but it’s been performing so much better compared to other economies lately,” he said.

However, he said “some things are still wrong with us because structurally, we have a weak economy.”

Sicat, a professor at the UP School of Economics, said job creation remains a challenge to government.

“Over the years, our industries that used to have been supported by high tariffs became unable to compete with the rest of Asia and we became less competitive in that respect. As a result, unemployment has become a continuous problem. It’s not only unemployment, high underemployment is present,” he said.

The Philippine economy grew by 7.6% in the first half, one of the fastest in Southeast Asia. The economic growth was attributed to higher consumption, manufacturing and government spending.

But despite this, the number of unemployed Filipinos increased to an estimated 3 million in July.

Foreign ownership restrictions

Aside from job creation, Sicat said sustaining foreign investments has also become a problem over the years.

“Some companies that came to develop certain types of industries, when things became difficult in our country, they migrated their factories to China, Vietnam and some other players,” he said.

Sicat explained the car manufacturing industry, for example, failed to flourish in the Philippines because of restrictions on foreign capital, which are more relaxed in other countries.

“We were almost at par with the rest of Asia at the beginning. We were attracting them, but over the period when our economy is not doing well, their economies did much better. And as a result, the volume of cars they can manufacture and assemble locally in their countries became higher,” Sicat said.

“Their system of incentives for their car manufacturing industry as an element of their industrialization was more open to foreign capital coming in. In our case, there were many restrictions here and there that made them want to go where they could be assemblers with full control of their facilities,” he added.

Sicat believes the economy took a hit because of these foreign investor restrictions, saying the “economic nationalism” of the Constitution is a major problem.

He said ties with the US didn’t help the cause because other foreigners may have felt alienated.

“In the early part of the period when we were dealing with the special relation problems with the US, we got involved in the parity special relations. Because the constitutional provisions we had practically said we exclude foreigners, and then later on because we had to make accommodations to Americans, we included them as part of the whole set up. I think this became a stab in the heart of our nationalists because they thought we had a problem because we were giving our country away to some foreigners but not all,” he said.

“Foreigners felt that we became an area for investments by one particular nationality,” he added.

Aside from being the first NEDA chief, Sicat was also named economic planning minister during the Marcos administration.