Aquino must achieve everything previous presidents failed to do

FILIPINOS as a whole expect our new president to govern in such a way that more jobs are created and the poor members of society are lifted from their condition.

They expect Mr. Noynoy Aquino to make his administration corruption-free and his campaign slogan “Kung walang kurapsyon, walang mahirap” (No corruption, no poverty) a reality.

That is also what people in the business sector want. But surely excepting those whose business model is the one that has prevailed for decades—have connections who can rig the bidding process and make huge profits that you share with government officials.

The ethically upright businessmen are looking forward to the creation as a result of the new president’s policies of a highly competitive and business friendly environment.

Economists know the new President will face large unemployment and underemployment numbers, deepening poverty, a difficult-to-expunge culture of corruption and culture of bad governance, and very poor infrastructure which is the cause of minimal business activity in the poorest provinces.

“People will expect the new President to reverse the neglect in education, health and public infrastructure. People will be expecting an open, transparent and effective government that will make a difference in their lives,” Benjamin Diokno, budget secretary during the Estrada administration and an economics professor at the University of the Philippines, told The Manila Times.

Unemployment, underemployment

During the last nine years, the number of unemployed and underemployed has increased, and the number of poor people has expanded.

The National Statistical Coordination Board reports that poverty incidence in the Philippines stood at 26.9 percent in 2006, higher than the 24.4-percent figure in 2003. Statistics released by the Arroyo administration show a rosier picture. But these are likely owing to redefinitions of the terms “employed” and “poverty.”

Unemployment as of January 2010 reached 2.8 million, according to the National Statistics Office.

Worsened government finances

At the same time, Diokno added that the government finances have worsened.
Public debt soared from P2.5 trillion to P4.5 trillion.

The next president would also inherit from President Gloria Arroyo a more fragile fiscal house characterized by large deficits and a sputtering tax-to-gross domestic product (GDP) ratio.

The country’s tax-to-GDP ratio has worsened, now down to a little above 12 percent.

“This means that under an unchanged scenario, Filipinos would pay higher taxes or receive less public services in the future,” Diokno said.

Diokno said that the “structure of the economy has not changed significantly” under the Arroyo administration, adding that the services sector dominates the economy.

We cannot rely only on BPOs

Ma. Lourdes Sereno, AIM Policy Center executive director agreed, saying that “The Philippines cannot rely alone on BPO [business process outsourcing].”

Given this unhealthy situation, the new president should prioritize infrastructure-building and—improvement, spend on these which also creates lots of jobs, to arrest the flight of manufacturers to the Philippines’ neighboring countries whose infrastructure conditions are better for their businesses.

“Infrastructure continuous to lag so poorly. We have to reverse this lag. The business sector is so concerned with the relocation decision of many of our manufacturing firms,” Sereno said, adding that the relocation of manufacturing firms could lead to a reduction of quality employment in the country.
These manufacturing firms are mainly foreign direct investment projects.

The AIM executive said the next administration should focus on energy and transportation infrastructure.

“The power [sector] is so negatively perceived. The perception of businessmen is that the government cannot even assure that there will be energy in the future. Power in the Philippines is not only costly. It’s also not reliable,” Sereno said.

Good governance, improving competitiveness

Donald Dee, vice chairman of the Philippine Chamber of Commerce and Industry said the new government should focus on good governance, improving the country’s competitiveness, eradicating poverty and providing more jobs.

Based on this year’s World Competitiveness Yearbook, the country performed badly in terms of infrastructure, ranking 56th out of 58 countries surveyed.

By subindex, the country’s technological, scientific, and human resources infrastructure ranked 56th; health and environment, 48th; and technological infrastructure, 29th.

Overall, the Philippines ranked 39th out of 58 countries in this year’s World Competitiveness Yearbook with a score of 56.526, up from 43rd last year.

The Philippines lagged behind neighbors such as Singapore, which ranked first; Malaysia, 10th; Indonesia, 26th; and Thailand, 35th.

To improve the Philippines’ competitiveness ranking, Dee said the next government must show strong political will, and promote a level playing field.

The incoming president, Dee said, should also “apply the rule of law and restore faith in public institutions; ensure food and energy security; plan for natural disasters and climate change; provide entrepreneurial opportunities, jobs, skills training and education in the countryside; and address migration into cities and configure urban areas appropriately.”

Higher and more inclusive growth

Former Budget Secretary Diokno also recommended that the incoming president should commit to higher, more sustained and inclusive growth of about 6 percent to 7 percent from 2011 to 2016.

Government data shows that the country has averaged 5 percent annual GDP growth between 2002 and 2006.

Because of the global economic and financial meltdown, in 2009, Philippine GDP grew by only 0.9 percent, or at the low end of the official target range of 0.8 percent to 1.8 percent, making last year’s growth the weakest since 1998.

He also recommended that agriculture production be modernized in order to ensure low food prices and to create a lot of jobs.

The provision of education and health services has to be prioritized in order to give the poor an opportunity for gainful employment, Diokno said.

“The government should spend at least 5 percent of the budget for well-chosen, socially profitable public infrastructure; this will help achieve the strong, sustained and inclusive economic growth and will create a lot of jobs for the unemployed Filipinos,” Diokno added.

Transparency in tax and spending policies

On the fiscal situation, Diokno said there is greater need for openness in its taxing and spending policy.

“Public spending should be subject to sunlight. Tax burden should be clear. There has to be greater transparency in showing who are the beneficiaries of some government programs,” he said.

Diokno added that the government should improve significantly its records on control of corruption, political stability, rule of law, and government effectiveness in order to improve the economic environment for investment.

These are all problems that every Philippine since the start of the post World War II Philippine Republic has faced.

But the future President Benigno “Noynoy” Aquino 3rd simply has to achieve all these things all past presidents failed to do. This is because we are at a critical juncture in our regional and in the global economy.

If we continue being the way we are in the next six years under our new president, we will become worse and worse and become the pitiful basket case of Association of Southeast Asian Nations. –Darwin G. Amojelar Senior Reporter, Manila Times