Given the political and economic challenges that the Philippine economy faces, compounded by external strains and territorial problems, how can the Duterte administration forge ahead in its third year in office and lead the country to a more fruitful era?
Positioning is the order of the day.
Amid internal threats to security and development, the US-China Trade war, the shift of the United States to a free and open Indo-Pacific strategy, and Chinese aggression in the South China Sea, the Philippine government should be steadfast in its commitment to national integrity. Only by wielding its independence in its economic and political agreements with China can the country possess the capacity to engage the rest of the international community with authority and credibility.
The upcoming year is another opportune time to actively engage with supranational institutions in order to strengthen the country’s bargaining power related to the South China Sea dispute. The Duterte administration should not ostracize the Philippines from the world, but should instead harness the potentials of multilateral agreements and actions to beef up the country’s capacity in bilateral relations. More so, to avoid violent conflicts, Philippine foreign policy should be geared toward a rules-based international order.
Another kind of positioning the country needs to do relates to economic development. With an average 6.5-percent GDP growth in the last six years, the Philippines is considered a leading economic performer in the Asian region. However, the rapid rise in commodity prices since the start of 2018 has alarmed both consumers and producers. With the Philippine peso reaching its weakest level against the dollar and foreign direct investments posting unimpressive growth, stabilizing and boosting the economy is one area that the Duterte administration must work doubly hard at.
While the economic outlook for 2019 is somewhat uncertain, a positive dimension can be discerned in the sweet spot
between regulation and nonregulation, in state and market collaboration. The expansion of market forces can be facilitated directly by government policies, though only with a consistent policy environment can big investments for job-creating enterprises thrive.
In turn, efficient market management in the implementation of government projects in infrastructure, manufacturing, public services and agriculture can fast-track such projects and programs and ensure that the public benefits from them sooner.
Political and economic positioning—an independent foreign policy and relaxed and delegated economic management—are, in effect, the watchwords toward a more progressive new year.
However, three basic things should be considered. First, the government should discontinue or scale back the tax reform on fuel excise tax and the passing of TRAIN 2. Second, the management of public expenditure should be improved, while the fight against corruption should be ramped up. Third, the private sector should be harnessed more by reducing the government’s role in strategic infrastructure projects.
The bigger social imperative is for the government to prioritize poverty reduction and labor expansion, to demonstrate the presence of inclusive growth. Simply giving dole-outs to the poor will not address poverty. Reducing poverty necessitates both political and economic reform.
Dindo Manhit is president of Stratbase ADR Institute.