Economic development as function of good governance

We should have learned the painful lesson by now: Genuine, inclusive, and sustainable economic development is only possible when a nation is governed well.

We should no longer be fooled into thinking that as long as there were nominal economic improvements, some corruption in government could be tolerated. We should no longer succumb to the fatalistic thinking that corruption is reality that could never be fully eradicated.

But as we make our way out of the ravages of the pandemic and begin addressing the structural inequities that have plagued us long before COVID-19, we should reject this defeatist notion. Good governance is possible if a country’s leaders are sincere, able, and resolute, and if various stakeholders commit to hold their officials accountable for their promises and pronouncements.

A Stratbase-commissioned survey by Pulse Asia held in June 2023 found that 84 percent of Filipinos agreed with the statement “Pursuant to the Philippines’ concurrence to international agreements, the power of national agencies, laws, and mechanisms to fight corruption should be strengthened.” Sixty-two percent of Filipinos are also aware that controlling corruption will help boost economic recovery and improve the plight of ordinary citizens.

Thus, Filipinos may be used to hearing about corrupt acts in government, but it does not mean that they are clueless about its consequences or that they are willing to simply accept and tolerate it. They know that something can be done about it. Our political institutions can be reformed and cleansed so that they would inspire confidence not only among the people, but also among businesses and investors.

This is how good governance establishes an environment conducive to investments, which in turn create jobs, enable upward mobility, fuel further economic activity, and narrow socioeconomic gaps among the people.

The current administration has, on several occasions, talked about the need to address graft and corruption. Most recently, President Marcos in his State of the Nation Address (Sona), highlighted the importance of transparency and accountability in government. But how are these lofty words being translated into the way the government is actually run from day to day?

Immediately, on the day after the Sona, the administration’s economic managers held a Philippine Economic Briefing with the theme “Agenda for Prosperity: Economic Transformation Toward Inclusivity and Sustainability.”

Finance Secretary Benjamin Diokno acknowledged that to improve revenue collection, the government must have a simpler, fairer, and more efficient tax system through tax reform policy and tax administration measures. He said that when it comes to policy for foreign direct investments, our current environment is the most open and liberal it has ever been.

National Economic and Development Authority (Neda) Secretary Arsenio Balisacan said boosting productivity and increasing investments will sustain economic and social transformation. Neda will continue to evaluate its development road maps to ensure we are on track with our goals.

Meanwhile, Department of Budget and Management principal economist Dr. Joselito Basilio, on behalf of Budget Secretary Amenah Pangandaman cited the agency’s achievements in bureaucratic efficiency. Among the reforms are digitalization through the Integrated Financial Management Information System, and inclusivity through the institutionalization of the Philippine Open Government Partnership.

The 2024 national budget of P5.768 trillion, higher by 9.5 percent than the previous year’s and equivalent to 21.7 percent of GDP, will remain anchored on the eight-point socioeconomic agenda where the main focus of expenditures are food security, physical and social infrastructure, and reduction of transport, logistics, and energy costs.

The inflation rate continues to be high at 5.4 percent, and that much still needs to be done to achieve the target range of 2-4 percent by the fourth quarter of the year. Nonetheless, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco Dakila Jr. said the Philippines was one of the most aggressive in Southeast Asia in curbing inflation through monetary tightening. BSP Governor Eli Remolona Jr. highlighted the importance of collaboration between the public and private sectors for a strong, stable, sustainable, and financially inclusive economy.

The government must ensure that it establishes and maintains the right environment to attract investors  and actively collaborates with the private sector, both domestic and foreign. Among the simple desires that we hear from them are transparency, accountability, responsiveness, and stable policy environment. We cannot eradicate corruption, but we should persist in controlling corruption.

We need to maximize the resources of government and human resources through the power of technology. We need to find digital transformation as a key part of governance.

We could listen to promises, but more importantly we should keep track of the concrete steps that the government is taking to improve the way it is doing its job. Only these would convince us that we could slowly build back trust in our institutions and will make businesses decide to invest and stay here for the long haul.

Dindo Manhit is founder and CEO of the Stratbase Group.