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A remarkable year 2012 was.

In his time, President Fidel Ramos brought about some dramatic changes in the business environment—changes that to this day we are still benefiting from. He deregulated the key sectors—sectors that are now vibrant and competitive: telecom (there would be few cell phones today if PLDT had retained its monopoly), power (we’d still be having blackouts), oil and banking.

Well, President Aquino has made no such changes in the economy, but he certainly has done some on the social environment. Not a lot, but these are the ones that will effect the kind of massive change Ramos triggered for business.

The first change the President caused was to reduce the arrogance of power. That small, simple act has steered government leaders to act and behave more in tune with the popular sentiment.

A former president embroiled in so many scandals is being investigated, and already being tried on a couple of serious offenses. A clearly protectionist ombudsman was forced to resign, and an active, independent one has replaced her. A chief justice was successfully impeached. And there are numerous high-level tax evasion and smuggling cases now in court (an area that needs much reform as well, but where President Aquino has little control).

The GOCC (Government-Owned and -Controlled Corporation) Governance Act was signed into law (Republic Act No. 10149). State-owned firms will now be examined by a Governance Commission for GOCCs (GCG). The GCG will determine if a state-owned firm needs to be reorganized, merged, streamlined, abolished or privatized. Prior to the enactment of this law, President Aquino issued directives that effectively rationalized the (excessive) bonuses of GOCC officials.

The Aquino administration launched the electronic Transparency and Accountability Initiative for Lump Sum Funds or eTAILS where the public can now access in real-time, through the DBM (Department of Budget and Management) website, how senators and representatives spend their pork barrel.

The 2011, 2012 and 2013 national budgets were crafted using the zero-based budgeting scheme, which enabled government to prioritize key initiatives and effective programs, and terminate inefficient ones that were prone to corruption. National budgets were passed on time. Under Arroyo, they weren’t.

These anticorruption measures have helped the Philippines improve its ranking in the Transparency International’s Corruption Perception Index. The country now ranks 105th out of 176 countries. Before Aquino came into office, it was worse—and worsening. (The methodology was changed, so a direct comparison can’t be made.) The government’s goal of breaking into the upper half of the rankings is attainable under President Aquino.

Then there’s passage of the vociferously opposed sin tax law, which increases the taxes on cigarettes and alcohol, and which also levels the playing field of competition in the two industries. And, of course, there’s the reproductive health law; if he had lost this one, he would have lost much of his clout. Finally, here is a leader who could stand up to the Church on state matters.

Next will be, as House Speaker Feliciano Belmonte hinted, divorce. It too will get Congress’ nod. With the Philippines being the only country in the world that doesn’t permit it, Filipino clerics don’t have a leg to stand on in opposing it. The problem isn’t the word of God or the Catholic Church, it’s the myopia of the Filipino Catholic clergy. They are out of step with their brethren everywhere else.

In addition, the Aquino administration synchronized ARMM (Autonomous Region in Muslim Mindanao) elections with the May 2013 midterm polls—an objective that required an enabling law; and got the two bills amending the Anti-Money Laundering Act approved, which prevented the Philippines from being downgraded to the “blacklist” of the Financial Action Task Force.

Some of the President’s other priority bills have also been signed into law—Mandatory Kindergarten, Data Privacy, New AFP Modernization Act, and Cybercrime Prevention Act. Others (e.g., the third round of Amla amendment, additional benefits to household helpers, fiscal incentives rationalization, and amendments to the Witness Protection Act, Whistle-blower Protection Act, and Institutionalization of K+12) are at various advanced stages of legislation.

Even on the economic side, progress has happened. Most dramatic perhaps is the reversal of the downward ratings on the country’s credit position—the Philippines now is just one step below investment grade. Many other international ratings and comparisons have also improved. All this despite little being initiated by government.

What haven’t improved, but must, are competitiveness and attractiveness to investment. Both are in the doldrums. Foreign investment inflows are still lackluster—$2.2 billion in 2011 to mid-2012. Additionally, there is the overly slow pace in job creation—only 1.2 million additional jobs were generated from October 2010 to October 2012 or 600,000 per year when a minimum of 1 million new, properly paying jobs are needed annually if the poverty trap is to be broken.

True, a GDP growth of 6.5 percent is not to be sniffed at. Driven by the services sector, it’s likely to continue into 2013 and beyond. But it’s not the sustainable 7+-percent growth rate needed to lift the masses out of poverty.

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Tags: anti-corruption drive , Aquino iii , bangsamoro deal , column , Cybercrime Prevention Act , economy , eTAILS , peace process , Peter Wallace , reforms , reproductive health law , sin tax law , Smuggling , tax evasion

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