Crossroads (Toward Philippine economic and social progress)
Philippine Star, 18 June 2014


In 2010, Benigno Aquino III was elected president. This was an unforeseen event just a year prior, as he did not seek the office then. The unseemly timing of his mother’s death, the former president Corazon Aquino, brought accidental nostalgia to the nation that propelled his nomination to presidential candidacy and, later, to resounding poll victory.

The countdown begins. Three years of this presidency have passed, and the fourth of a six-year term is going on. This is the countdown.

In the first two years, it is possible to blame the predecessor in office for the nation’s problems. Now, everything depends on how he leads.

When he took office, he did not carry any baggage of promises. His was a simple message during the campaign: “kung walang corrupt, walang mahirap.” This message put in a nutshell his promise to introduce good government and to eliminate corruption, that the nation’s economic affairs could be straightened up.

It is time to take an interim assessment that enables us to see the bright side and the worrisome aspects of this presidency. We begin with the positive: accomplishments.

Accomplishments. The most impressive achievement so far is that the economy is in good shape. This is not to say that it cannot do a lot better. The improvement of the macro framework is the result of good management of the public finances and helpful factors that are there, unrelated to who the president is.

he improvement of fiscal resources was matched by continued strength of the country’s foreign exchange position. Sustained earnings from exports and inflows of OFW remittances have buttressed this economic position against external vulnerabilities.The major international credit rating agencies took notice of the country’s state of macroeconomic health by giving corresponding raises in its credit ratings. By 2013, the country merited “investment grade” from all three.Rising to investment grade represents a unique climb in economic respectability for the country. Its investment prospects are enhanced. The cost of borrowing also is reduced. Moreover, it increases positive perceptions about the country’s economic prospects.Certainly, the fiscal managers made improvements in tax administration. The government was able to push for higher taxes through adoption of tobacco and alcohol taxes. Through prudent use of spending cuts, it was able to raise the allocation of the under-financed social sectors, such as education, public health, and assistance to the poor.

The fight against corruption was the signal effort of the government with respect to the improvement of accountability in public office. At first, the target of the anti-corruption campaign was against specific mis-governance in specific agencies. Eventually, the most serious cases were traced to actions within the Office of the President in the previous government.

This has led to the incarceration of the immediately preceding president, who was charged with plunder. The impeachment and removal of the chief justice of Supreme Court was another signal moment in this campaign.

Finally, the pork barrel plunder cases – ( the PDAP ) – exploded in the public consciousness leading to the filing of plunder charges against three senators of the Republic. And it promises more.

The government’s campaign to clean government and find the guilty accountable is one of the most comprehensive anti-corruption cases ever attempted in the country’s history.

For now, these moves are seen as succeeding. Although some see political color in these moves, if these cases are brought to successful completion for the government, they would mark a milestone accomplishment in the fight against corruption.

A most important accomplishment of the Aquino presidency is the passage of the RH (responsible parenthood) law: the government is empowered to dispense assistance to poor parents to plan the family.

This will impact on the future population level, but only in the long run. Without the additional direct push that President Aquino gave to this reform legislation, this defining law would have languished in Congress in view of the strong campaign against it of the Catholic Church hierarchy.

Weaknesses and liabilities of the Noynoy presidency. These accomplishments notwithstanding, there are serious weaknesses and liabilities that threaten or limit the achievements of what could otherwise be a successful and popular presidency.

Many of these deal with sector policies and leadership. In these problematic sectors, either there are unremedied weaknesses because of poor leadership or these are guided by contradictory policies that make it impossible to succeed.

Lack of space forces me to telegraph the main problems. Leadership is lacking in articulating the proper reforms or they have been hampered by poor or indecisive actions.

Food prices. The agricultural sector has been a captive of highly protectionist policies, making the country pay a high price for food items. It begins with the country’s main staple: rice.

Some of the issues are linked to the inadequate investment in the sector, to high tariffs in specific sectors and monopolies in trade, and to poor governance in the running of the agencies involved.

Energy. Much of the problems related to the high cost of energy are a result of the failure of the Energy department to encourage the establishment of a higher base load for generating power.

This problem was inherited from the previous administration but it was met with corresponding inaction in the early years of the Aquino government. The inadequate base load capacity continues to hamper future growth prospects.

Infrastructure. The incompetent handling of transport expansion issues is well documented. The much vaunted PPP (private-public partnerships) was delayed by indecisions, postponements and wrong decisions. It is only lately that major contracts are getting bidded out.

Missing reforms: (1) the ‘restrictive’ economic provisions of the Constitution and (2) greater flexibility of the labor market. President Aquino is not a big-vision president. If he were, he would understand the need for pressing on two major missing reforms that can substantially attract a larger quantity of foreign direct investments and make a dent on erasing direct poverty through employment creation.

I have written a lot about these concerns in this column and will continue to do so. Unless he moves in these directions, the quantity and quality of his economic achievements will be less, rather than more.