Doldrums?
Is the economy in the doldrums, as the President suggests?
No. And I don’t think that’s what he meant. What he meant, and he’s right, is that the poor are still poor, and there are still too many unemployed and not getting the opportunities they deserve.
The economy is, in fact, doing well. It’s having some of its best years yet, with growth close to 7 percent, and likely to even exceed that. Manufacturing is recovering, while exports are doing well (the much-maligned weakening of the peso is helping this). The services sector, albeit slowing a little in the BPO arena, saw 7-percent growth in the first quarter.
Investment is up by 12.5 percent, although committed investments have slowed somewhat, mostly due to the uncertainty of what taxes will be applied to them. You don’t build companies when you don’t know what tax you’ll pay—a serious reason why Congress must finalize and pass TRAIN-2 with urgency. The lower tax that corporations will pay will attract much higher levels of investments.
Jobs are being created. And the ever so long-delayed building of infrastructure is, at last, happening. But it could go faster if some roadblocks were removed.
So why “the doldrums”? There is a visual example of that: people with nothing to do and nowhere to relax in relevant comfort, thus loitering in the streets. They need jobs, they need decent housing. They don’t need jail. They’ve been like this for generations.
That, I think, is what PRRD is complaining about. The poor aren’t being uplifted quickly enough. And it’s tough to do so. The lack of infrastructure is certainly one of the reasons we’re not there yet. You don’t build a factory where you can’t get your goods to the market in a timely and cost-competitive manner.
TRAIN-1 has helped, with the BIR collecting P827 billion in the first five months of 2018, up 15 percent compared to the same period last year. That money will be spent to improve our future. The call to stop it is stupid in the extreme.
It’s why “Build, build, build” is such an important program to prioritize and accelerate. The benefits go way beyond just having a road. It’s a road to wealth for the people.
So what are the negatives? Well, inflation is one. But as I explained in my column on June 7, TRAIN is not to blame. Blame instead world events, rice shortages and avaricious traders caring not a whit for the consumer. Interest rates have risen, but that’s what happens when an economy is growing fast.
The peso? Exporters are happy, as are OFW families who have more pesos to spend. What costs more are imported goods, which the poor don’t buy. The middle class, meanwhile, has more money in its pocket that can cover that extra cost.
The ambitious program of the government to finally put infrastructure in place is not only creating jobs, it is also providing an environment that businesses would want to join. If the government gets the tax changes it wants in TRAIN-2, and the infrastructure planned is rapidly built, the Philippines will be back at the top 20 years from now—where it was when I invested here 44 years ago.
In the first five months of this year, the government collected P106.5 billion more than it has ever done in the past. That’s P106.5 billion more that will build the infrastructure to get us out of the hellhole previous governments had left us in by not building the resources people must have. We can’t move anymore, stymied as we are by lack of roads, airports and efficient sea ports, because the money and political will weren’t there. Now we have them, and we’re complaining.
No, I don’t live a hand-to-mouth existence, and I grieve for those who do. But I do know they’ll continue to scrabble in the junk heaps of our society, as they have for decades and will for decades more, if populist decisions are made.
Infrastructure is a critical ingredient to breaking the poverty trap, along with attracting huge levels of job-creating investments. TRAIN-1 does the first, TRAIN-2 will do the second.
Senators and congressmen need to think on this. TRAIN-2 will create jobs. So pass it before you start campaigning.
This is a government that is actually thinking in the long term. We have gone too long with short-term thinkers and suffered for it. History notes that great leaders are the ones who did what was necessary, and not only what could win votes or enamor people.
The doldrums I know of, as a sailor, are the waters near the equator where there’s no wind. It’s not where the Philippines is.
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