Elusive momentum

Our economy’s growth rate may have stepped up to 6.6 percent from 3.9 percent in 2011, but that’s still not quite growing twice as fast—the declared goal of last year’s “Arangkada” forum of the Joint Foreign Chambers of the Philippines (JFC). Last week, the JFC gathered once again for “Arangkada 2013” to assess progress on a package of recommendations they made in late 2010 toward achieving accelerated and broad-based growth for the Philippine economy.  More than two years hence, the group again took stock of forward movement—or the lack of it—in some 470 recommendations embodied in the 2010 document of the same name.

This year’s assessment results show overall improvement over those of last year. The recommendations that moved ahead—that is, those that had been identified as “started,” saw “substantial progress,” or deemed “completed”—comprised 65 percent of the total, better than last year’s 51 percent. Still, much remains to be desired. Only 2 percent of the 2010 recommendations have been completed, and only 16 percent—less than one out of five—have seen substantial progress in implementation. Those marked as “started” comprised the largest group (44 percent). While this is positive news, it fails to evoke jubilation considering that two years is much too long to just begin acting on a problem. Meanwhile, still over a third of the recommendations have seen no movement, or worse, saw backward movement or regression.

What are these recommendations all about? They fall under broad headings that address constraints to economic growth: overall competitiveness; specific economic sectors like agribusiness, business process outsourcing (BPO), creative industries, tourism, various types of infrastructure, and others; general business environment; environment and natural disasters; governance; labor; security and social services. The good news is that for most of the categories, implementation has improved since the 2011 assessment, with the number and percentage of active recommendations (as against “dormant recommendations”) having significantly gone up in a year’s time. The best improvement was adjudged to be in the area of environment and natural disasters (with 14 recommendations), where implementation of recommendations rose from 64 percent in 2011 to 100 percent in 2012. Major improvement was also seen in social services (numbering 25 recommendations in all), particularly in education (12 recommendations) where active recommendations rose from 42 to 83 percent. Recommendations on local governance (15) also saw substantial improvement, with active recommendations jumping from 40 to 87 percent. Similarly good progress was seen in the eight recommendations for pursuing higher economic growth, improving from 50 to 75 percent implementation.

The downside was seen in the provision of certain types of infrastructure, where dormant recommendations rose from 33 to 47 percent for airports, and 53 to 71 percent for power. Even then, improved implementation was seen in recommendations on infrastructure policy, roads and rails, seaports, telecommunications and water. But significant regression was also seen in implementing recommendations pertaining to judicial reforms and legislation.

To give the reader a quick sampling of specific recommendations referred to above, among those deemed to have been completed are the recommendations to (1) keep lump sum budgets to a minimum, having been a major source of corruption in the past, (2) create reasonable timetables to address the long registration period of build-operate-transfer projects, and (3) focus the national government budget on the core road network. Those deemed to have made substantial progress include the recommendations to (1) double funds for growth-promoting expenditures through less waste in government spending, more effective tax collection and selective tax increases; (2) strengthen the BPO sector with a robust legal framework; (3) commit the government to work with private industry for a clear overall policy in support of the manufacturing sector; and (4) constant quality improvement of teachers and school curriculums.

Recommendations deemed by the JFC as not moving include those to (1) create a roadmap for the National Renewable Energy Board, (2) reduce and rationalize congressional pork barrel, (3) rationalize holidays in view of the Philippines’ having the highest number of paid holidays in Southeast Asia, (4) channel remittances into productive investments, and (5) decongest Metro Manila by shifting international container shipment volume from Manila to Batangas and Subic ports.  On the last, I wrote recently on how the previous administration had declared the same as part of its 10-point agenda—then actually moved in the opposite direction by causing substantial expansion of container capacity in the Manila Port.

Those seen by the “Arangkada” assessment to have moved backwards or regressed include recommendations to (1) fight smuggling vigorously; (2) reduce marine transport costs; (3) continue to increase judicial salaries and hire more judges, encouraging new judges to reduce the case backlog; and (4) eventually make Clark the primary international gateway, connected to a high-speed rail line. Indeed, I thought the last had already been firmly committed to back in the 1990s.  Recently, I was surprised to hear of a major private sector initiative reportedly already underway to build the international airport not in Clark, but in Cavite!

We can’t accelerate if we can’t even keep moving consistently forward. Arangkada? We need to stop moving atras-avante first.

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