Almost two years after the Philippines got a fresh “restart” with the election of President Aquino, the Chief Executive has himself pressed the restart button for the economy with the appointment of a new head of the National Economic and Development Authority (Neda).
As the new economic planning secretary, Arsenio Balisacan takes over from the intelligent and affable (but apparently too cautious) Cayetano Paderanga Jr., who oversaw the early implementation of the Aquino administration’s cornerstone economic policy, the Public-Private Partnership program.
The PPP program during these past two years is hardly anything to be proud of, having wasted crucial time that could have been used to help pull more people out of poverty and push the Philippines higher up the ladder of economic development. But while some quarters would conveniently lay the blame for PPP’s mis-start at the doorstep of Neda, the responsibility goes far beyond the agency. And higher up.
Going forward, however, the Neda under Balisacan has a unique opportunity to play a role in restarting the stalled PPP program and ensuring that the Aquino administration would leave a more well-rounded legacy after 2016, as opposed to the lopsided one it has been molding so far.
Balisacan’s specialty in the field of economics is the area of poverty alleviation, and his early pronouncements on the issue jibe perfectly with those of the administration to create inclusive growth that will benefit the majority of Filipinos. (At his first press conference as Neda chief, Balisacan said: “I share the view of our President that we need to permanently break away from this pattern of growth [i.e., weak capacity to transform growth into poverty reduction], making development more inclusive, ensuring that it benefits everyone, especially the poor and the highly vulnerable groups in our society.”)
Yet this inclusive growth model, which requires growing the economy from the ground up (as opposed to the more conventional trickle-down effect) will take more time and effort—and certainly has less examples of success.
The challenge for Neda and this administration will be to pursue inclusive growth without neglecting the clear benefits that private-sector-led economic development can rapidly bring. To be sure, Neda, by its very nature, is an agency of economists, analysts and statisticians who have no direct control over the so-called “policy levers” that control the economy. It is not like the central bank or fiscal authorities that can accelerate or slow down the economy by releasing or pulling money from the financial system. The Neda being a planning agency, instead of an implementing one, its powers are somewhat limited. But it is also one of the most crucial agencies because the Neda chief is the vice chair of the Cabinet-level Investment Coordination Committee, where all projects worth over P50 million are reviewed and approved (or rejected). It is here that Balisacan can make a difference: He can help move the approvals process for job-creating infrastructure projects much faster than its snail’s pace of the last two years.
Like the conductor of an orchestra, the Neda chief plays no instrument but sets the mood and tempo for the entire group to produce not only soothing but also dynamic music—encouraging the lush violins, teasing out the sound of a flute, or signaling a sharp clash of cymbals.
The worst thing that this administration can do in the next four years is to maintain precisely what it has been doing these last two years: cramping the initiatives of profit-hungry, private-sector investors by sitting on project proposals that would have generated employment, put food on the table, and moved the country in leaps and bounds.
To make things work, the administration must do two things: facilitate the faster implementation of PPP projects, or step aside and let profit-oriented businessmen take the lead (remembering that the profit motive is one of the most potent forms of spurring economic development, uneven as it may be).
Enough time has been wasted, and more time will pass before any of these big-ticket projects manage to break ground. With the impeachment trial of Chief Justice Renato Corona winding down, the Aquino administration must channel the political will it has exhibited in the political arena toward jump-starting the economy.
Either that, or use the same political will to make the decision to get out of the way of the free market.