Investors are worried about developments on the political front, particularly in this volatile period before the official start of the campaign for the presidency. There is no problem regarding the consumption side of the economy as consumer spending will continue to be boosted by the billions of dollars sent home by overseas Filipino workers and the revenues from the still-expanding BPO (business process outsourcing) sector. Then there is the usual extra spending for the May 2016 national elections.
A big concern among investors—those who put money in job-generating undertakings such as manufacturing plants and infrastructure projects—is the uncertainty that would mark the end of the term of President Aquino. It is exacerbated by the fact that Mr. Aquino’s chosen successor, former interior secretary Mar Roxas, is trailing the other presidential candidates leading in the surveys, Davao City Mayor Rodrigo Duterte and Sen. Grace Poe, who are both facing disqualification issues.
The investors’ predicament is well captured in a study released this week by The Hongkong and Shanghai Banking Corp. (HSBC), which pointed out that the May 16 election, while boosting both government and private expenditures, would also see investors retreating to the sidelines and adopting a wait-and-see stance. The study, written by HSBC economist Joseph Incalcaterra, noted that the large degree of uncertainty arose from the rulings of two divisions of the Commission on Elections disqualifying Poe—which she is appealing—and the rise of Duterte, a candidate who has yet to elaborate on an economic agenda. As the HSBC’s analysis of past electoral cycles showed, this will most likely result in more subdued private investment over the next two quarters.
The leading presidential candidates would do well to heed the advice of Ernesto Ordoñez, chair of the nongovernment organization Agriwatch, who was the secretary for presidential flagship programs and projects and undersecretary for agriculture, trade and industry during the administration of President Fidel Ramos. Agriculture, which employs a third of the population, has become the laggard sector in the economy because of continuing neglect by the government that, in turn, has failed to lure investors to the countryside. According to Ordoñez, the presidential candidates must address this problem immediately as it concerns food security and the fate of the poor. If they ignore this issue, their talk of a better future for Filipinos would be an empty promise, he warned.
During a stakeholders’ meeting last Dec. 12, leaders of the various subsectors in agriculture expressed fears that the same lack of support for agriculture during the Aquino presidency might extend to the next six years. The neglect is evident in the fact that the increase in the budget of the Department of Agriculture during the past five years did not result in the growth of the farm sector. In contrast, the industrial sector performed better despite the lower budget given to the Department of Trade and Industry.
The stakeholders have highlighted some of the key issues that need to be addressed by the next administration in the agriculture sector: the 35-percent tariff on rice that will take effect in 2017, posing severe danger to food security and the livelihood of rice farmers; the lack of incentives to the livestock and feeds sector to make them competitive with their neighbors in Asean; the displacement of small fishers by large operators in the very municipal waters reserved for them, as well as by subdivision and tourism projects; the continued deprivation of coconut farmers of their billions of pesos in levy funds; and such festering issues as lack of credit and insurance, technology and marketing, women empowerment and antismuggling measures.
In February 2016, the presidential candidates will have an opportunity to expound on their programs for the agriculture sector. Some 600 agriculture stakeholders have invited them to a conference at the University of the Philippines Diliman to discuss their agenda. It’s a chance for them to present concrete and credible plans as well as doable programs that will uplift the living conditions of farmers and fishers. They owe this not only to their supporters but most importantly to the millions of Filipinos who remain dependent on farming and fishing.