For the third consecutive year, I was honored by an invitation from the Joint Foreign Chambers of the Philippines to be a principal speaker at its annual Forum. Here are excerpts from my speech:
Inclusive growth is not a question of making poverty more tolerable for the poor but a question of reducing poverty and making the poor become middle-class and making that the larger segment of our society. High GDP growth rates do not a democratic society make by themselves; inclusivity has to become much more widespread.
Pursuing inclusive growth is not really about redistributing wealth and income. Rather, it’s about providing genuinely equal opportunities for all. Inclusive growth is about ensuring that all Filipinos can readily access needed human, natural, physical, social, and financial capital to be able to pursue opportunities to uplift their lives. In other words, inclusive growth calls for correcting our social, political, and institutional flaws that perpetuate unequal access to economic and political power.
What can the administration do to pave the way for more inclusive growth in the coming years?
Let me highlight some possible steps.
One, introduce amendments to the economic provisions of the Constitution to encourage more foreign direct investments. While our FDI has increased over the years, it continues to crawl at the bottom of the pack among countries in the region. We clearly need more FDI as that in turn would help bring about the job creation we are all looking for, and with it a more robust middle class resulting in inclusive growth. A bold move along the lines proposed by Speaker Feliciano Belmonte is perhaps what’s called for at this point.
Two, unleash the full potential of two of our principal competitive advantages, namely agriculture and mining. Agriculture needs genuine agrarian reform to steer the sector toward an emphasis on productivity and lay the foundation for an agro-industry-based configuration. That requires changing our current land reform paradigm, which focuses on ownership rather than productivity, romanticizes subsistence farming, and puts much of the blame on credit policies. The opportunity for doing this presents itself when the present law expires in the middle of this year.
As for mining, what more can be said about mining that hasn’t already been said? It’s a sector whose issues have been discussed ad infinitum, but discussions do not a mining industry make. The administration has to come to a decision point. Continuous dribbling of the ball does not allow us to tap into a resource that could provide jobs and inclusive growth via the establishment of a basic foundation industry for manufacturing.
Three, effective implementation of the Epira (Electric Power Industry Reform Act of 2001). Blackouts are already a reality in Mindanao. The important Epira objectives of establishing a better system toward competitive pricing and fostering an environment that encourages the building of new power facilities on a timely basis need much improvement. We must plan well ahead to make sure that we don’t find ourselves scrambling to cover a power generation gap with too little, too late.
Four is infrastructure. We are now witnessing a rush of road works and that’s a good step forward. But let me reiterate the need to make decisions rather than continued prevarication. A case in point has to do with the long-drawn-out process of deciding on our international airport. A decision on this is crucial. Our airport represents the first impression of investors; we don’t want the first impression to be “the worst airport in the region,” do we?
Five, reforms at customs and the relentless pursuit of an antismuggling campaign. Smuggling undermines a level playing field and jeopardizes the industries that are already here. As for taxation, for the first time, surveys show tax administration becoming a top concern of businessmen. May I just gently remind policymakers that it may not be a bad idea to balance the vigorous chasing of assorted tax cheats and tightening revenue regulations with promulgation of policies that can expand the tax base.
Six, enactment of an effective competition law. If we are aspiring for a truly democratic business environment, then we must understand that its essence is competition. Without a competitive environment, we end up with oligopolies, and a social structure that will continue to feature an increasing gap between the very rich and the majority poor.
Seven, adequate and early preparation for regional and global reconfigurations that will soon affect our economy, particularly the Asean Economic Community and the Trans-Pacific Partnership. It is imperative that we be prepared for these global game-changers. We have a tendency to wait until the last minute and then scramble furiously to try to still position ourselves while other countries are already much more prepared. If we don’t prepare early and don’t clearly define competitive advantages, then the only competitive advantage left for us in an AEC may end up to be our ability to export more Filipinos to the rest of the countries around us.
We have to walk our talk. While we are proud of the growth performance of our economy, we should make use of this as a platform for ensuring that reforms that would create a rising middle class by creating jobs are institutionalized.
Should the administration institutionalize needed reforms, it would have also helped instill in our mindsets a belief in our ability to walk our talk.
Roberto F. de Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year, 1995, 1996 and 1997.