A few weeks ago I attended the annual Philippine-US Trade and Investment Forum and had the honor of being asked to join the panel (along with Ambassador Jose Cuisia and Mr. Manny Pangilinan) representing the private sector. Secretaries Benjamin Diokno (budget) and Ramon Lopez (trade) and Bangko Sentral Director Francisco Dakila Jr. presented updates on the Philippine economy, focusing on the recently passed legislation on tax reform (TRAIN, Part 1), the infrastructure program (“Build, build, build”), and the growth outlook of the economy (a robust 7-8 percent, in their collective view).
To some extent they didn’t present more than what I hadn’t already heard about and known, and admittedly mostly agree with, partly because the present economic strategy has some parallels with that undertaken during the administration I served—that of President Fidel V. Ramos. At that time we also deployed a two-pronged strategy of fiscal reform and infrastructure resurgence that successfully led to budget surpluses and the introduction of the private sector as a major partner in the construction and financing of vital infrastructure.
The present administration’s drive to improve the Philippines’ competitiveness in both taxation and infrastructure deserves support, but it would do it well to pay equal attention to improving the country’s competitiveness in business permit and approval time frames (among the slowest in Asia), as well as bureaucratic processes (tedious and still prone to corruption). Its infrastructure program is likewise commendable, but must demonstrate expeditious implementation and judicious prioritization. The list of projects may be impressive on paper, but nothing beats visibly accomplished, shorter gestation projects to establish much-needed credibility for the entire program.
Notably, previous tax reforms were enacted under the duress of an economy in need of resuscitation, while the present reforms are meant to launch the Philippine economy toward a thus-far-elusive continuing upward growth trajectory.
But perhaps the most interestingly curious presentation at the forum was the “View from Washington,” as articulated by former US ambassador to the Philippines John Negroponte. He outlined the present highlights of the US economic strategy as: 1) a tax reform bill that would stimulate the economy and provide greater purchasing power to American consumers as well as leave more investible funds for corporations to deploy toward expanding business opportunities; 2) a massive infrastructure rehabilitation and development program that would necessitate the mobilization of large numbers of construction entities; and 3) deregulation that would render the United States more competitive as an investment destination.
He capped this presentation with an invitation to Philippine business to take the opportunity of investing in a resurgent US economy.
I was nonplussed by this appeal. It was the first PH-US Business Council gathering I attended where the US side was seeking Philippine investments in America rather than the other way around, which had been the context of all previous Council discussions, as befitting the relationship between a giant developed economy and a small, developing one. It’s not so much that the appeal was bereft of merit as that it seemed to reflect the present state of confusion in our part of the world regarding US trade policy: Countries like ours try to divine US intent while receiving mixed and unprecedentedly contentious signals from various parts of the US government and political structure.
I may be reflecting on an “old school” viewpoint, but the days of a more clearly articulated US vision of global progress appear to have disappeared, if even perhaps momentarily. Meanwhile, Asian economies like ours are offered a much more clearly outlined vision of Asian progress by China, with its One Belt, One Road initiative. No such equivalent offer has so far been put on the table by the United States. From a geopolitical perspective, the choice between a clear offer and a fuzzy one is what Asian nations face. As long as America continues to sound like a Tower of Babel, its Asian sphere of influence would be in danger of waning.
Roberto F. De Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.