Cabinet shakeup needed to rescue RP economy

Published by rudy Date posted on March 18, 2009

The P1.4-trillion General Appropriations Act for 2009 purportedly contains an economic stimulus package worth P330 billion, the equivalent of about $6.8 billion. However, only P30 billion, or about $613 million, are actually “new” allocations, according to Dr. Rene Ofreneo, executive director of the Fair Trade Alliance (FairTrade).

The bulk of the so-called Philippine Economic Resiliency Plan (PERP) consists of routine allotments to government programs and projects already in existence even before the worst economic crisis since the Great Depression of 1929 hit the world last year.

“The PERP is not only badly packaged and delayed by the usual budgetary wrangling in Congress,” Ofreneo said at the Kapihan sa Sulo media forum last Saturday. “It also misses the central role of what a stimulus package is supposed to do—that is, to stimulate or stir a slumbering national economy in order to spur growth and preserve and create jobs at home. This means saving and strengthening critical industries at home. This is what ‘industry bailouts’ really mean.”

FairTrade describes itself as a “multi-sectoral alliance waging a campaign for just and fair trade for the Philippines in the context of the need to develop a balance, progressive and sustainable national economy.”

According to FairTrade, the Arroyo administration’s PERP says nothing on how local industry and local agriculture can be revived and strengthened to perform the task of creating national wealth and jobs.

In contrast, Ofreneo pointed out, the $787-billion stimulus package of US President Obama requires public-funded infrastructure projects to source their steel, iron and other supplies from American producers, precisely because the package is directed at reviving and strengthening American industry and employment.

FairTrade evaluated the PERP by comparing it to the programs adopted by other countries in their bid to address the effects of global recession on their economies.

In Asia, three countries are well-positioned to withstand the global recession: China, India and Indonesia. These populous countries have a uniform program of sustaining growth by relying on the continued growth of their home markets and industries.

China’s $586-billion bailout package, announced last November, is directed at stimulating domestic demand for the output of its own industries.

India has one of the highest industrial and agricultural tariff structures in the world. As a result, its strong home industry and agriculture have enabled India to provide jobs for its teeming millions even as its much-vaunted information and communications technology (ICT) sector is able to create only four million jobs out of a 400-million labor market.

In Indonesia, a large part of the government’s $6.15-billion stimulus package aims at supporting its industry and agriculture. For instance, Indonesian Minister of Industry Mari Elka Pangestu has refused calls from free traders to withdraw the government policy requiring civil servants to wear locally made uniforms and footwear.

High-ranking Indonesian officials have also opposed the early signing of a free-trade agreement between the Association of Southeast Asian Nations (Asean) and Australia and New Zealand on the ground that Indonesia is not fully prepared to handle the likely surge of Australian industrial and agricultural products, including automobiles, electronics, sugar, milk and meat.

Business as usual

In contrast, it seems to be “business as usual” for the Department of Trade and Industry and other Philippine government agencies.

“Officials seem unmindful of the earthshaking adjustments that the big countries—both developed and developing—are adopting to preserve and strengthen their domestic industry and agriculture through various bailout and assistance schemes,” Ofreneo said.

Many countries—such as the United States, China and those in Europe—have openly abandoned the policy of untrammeled free trade neoliberalism in favor of outright support to critical industries. However, the Philippines even wholeheartedly endorsed in the February meeting of the regional grouping the Asean, Australia and New Zealand Free Trade Agreement and Atiga, a consolidated free trade agreement in goods, despite the objections of the FairTrade and concerned industry groups during the Tariff Commission hearings last year.

“FairTrade hardly sees anything in the PERP that would stimulate, much less preserve, local Philippine industry and agriculture,” Ofreneo said. “Instead, we are treated to a sad spectacle where DTI technocrats are naively projecting higher export performance this year and next when it is abundantly clear that global export demand is falling and that the next best option is to look inward. Note, for example, how the 50-percent devaluation of the won failed to stimulate the sagging South Korean economy.”

Ofreneo concluded: “We need a Cabinet shakeup, especially in the economic cluster. We need a bold refocusing of the PERP. We need a long-overdue overhaul of an imbalanced economic program dependent on overseas Filipino workers and exports. We need a balanced economy based on a strong agro-industrial base. And in times of crisis, we need to take advantage of our own strength—a large market of 90 million Filipinos.”

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