Private involvement in P330-B plan queried

Published by rudy Date posted on June 26, 2009

The country’s top economist said yesterday the private sector should not be forced to fork in their share in the vague economic resiliency program (ERP) of President Arroyo since their involvement in identifying public infrastructure may involve conflict of interest.

UP School of Economics professor Benjamin Diokno questioned the involvement of unelected private individuals in the identification, selection and funding of public infrastructure.

Under the ERP, the government will tap big business to contribute P50 billion for a P100-billion portion of the P330-billion stimulus package along with a handful of government financial institutions (GFIs). The package was supposed to be injected to pump prime the economy to cushion the effects of a global recession.

Diokno, speaking before the 2009 UPS Asia Business Monitor (ABM), identified some of the major constraints facing the local economy and how the government had responded to it.

Diokno, a former secretary of the Department of Budget and Management (DBM) under the term of former President Joseph Estrada, referred to the involvement of the Philippine Chamber of Commerce and Industry (PCCI) in identifying public-funded projects under ERP. The PCCI had submitted an initial list of the projects to Malacañang for approval.

“How soon can these projects get implemented?” he asked, adding “details were sketchy because how can the government ensure transparency and fiscal accountability in the use of funds to be provided by government banks, social security agencies and the National Development Co. (NDC).”

According to Diokno, this part of the government’s resiliency plan is “terribly sketchy and its effectiveness doubtful.”

Diokno also cited the largest component of the P330-billion fiscal stimulus program which was supposedly the P160 billion in incremental governmental allocations which he described as bloated from “the real amount which is only P75 billion if the increase in personal services such as salaries and wages, and increase in the Interbal Revenue Allotment are netted out.”

“It matters whether the project to be funded is labor-intensive or capital intensive and in some cases, land-intensive like an airport, or whether the project is small or large,” he added.

For the stimulus program to work, Diokno said there should be an active participation from local government units. “Authorities from 81 provinces, 136 cities and come large, first-class municipalities should be involved in the reconstruction, repair and maintenance of local roads,” he added.

He also mentioned transparency as another important factor. “All projects funded under the fiscal stimulus program should be subject to sunlight. List of projects and their details like cost per project, date start and end and name of contractor should be posted in a Web site for ease of monitoring.”

He cast serious doubts on the ability of the Executive department to implement projects on a large scale because “allegations of corruption persist and poor executive-legislative relations and delays in budget approval.”

On the country’s export performance, Diokno said export performance is expected to worsen the rest of the year with earnings contracting to as low as 30 percent because the economies of the top 10 destinations of Philippine products which account for about 84 percent of the total exports are all projected to further deteriorate. Even with the expected recovery of the 10 developed economies starting 2010, Diokno said the local economy would likely remain weak until after 2010.

The United States is still the country’s biggest market with 17.5 percent share; followed by Japan, 15.5 percent; China at 9.71 percent; and Hong Kong, 8.79 percent.

In the same event, UPS Philippines managing director Tim Gohoc, in his presentation, noted that the 2009 UPS ABM survey that was conducted in January and February this year covering 1,200 respondents from 12 countries in the region including the Philippines, finds local small and medium businesses remaining optimistic in surviving the global slowdown. –Ayen Infante, Daily Tribune

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