Cracking the poverty riddle

Tomorrow, something unprecedented will happen. The two-day Philippine Development Forum convenes in Davao City.

The gathering brings together representatives of the business community, our international development partners, civil society organizations and academics. They will deliberate on our development issues and try to achieve consensus points. Those points and all the insights generated during this meeting will feed into the 2017-2022 Philippine Development Plan.

This is the first time a cross-section of society and a large number of stakeholders are convened to help build the official development plan. It is a truly democratic exercise. Hopefully this will be a productive forum. It will be helpful to this administration’s pledge to bring down poverty rates dramatically.

The Philippine Statistics Authority reports that a decline in our poverty rates—from 26 percent to 22 percent—did happen over the last five years. That is not enough. The Duterte administration is now finalizing plans that will bring down our poverty rate to only 13 percent by 2022. That is a tall order. It means pulling 1.5 million Filipinos from poverty each year.

Those are not just numbers. The lower our poverty rates are, the more difficult it is to reduce the number of the poor. There is such a thing as “core poverty”—the people with the least skills, needing to be made economically productive.

Much investment in our human capital, including informal training and adult literacy classes, will need to be made. Government needs to increase outlay for better public education, improved healthcare and greater
access to other support services. From today to 2022, government intends to devote 40 percent of all public expenditure to social services. This includes a more efficient cash transfer program and tightly targeted subsidies aimed at the poorest communities.

That is just the direct assistance. Around it is a comprehensive development thrust that includes closing our infrastructure gap, modernization of our agriculture for better yield, and a marked improvement in the ease of doing business in order to attract more investments.

President Duterte’s visit to China resulted in billions of dollars in investment pledges. That will give us a strong start in creating millions of new jobs for our people. Remember that fully 10 percent of our population works abroad on short-term contracts. We should be ready to welcome them back to work in a growing economy.

Two-thirds of domestic poverty is in the rural areas. Agriculture in its present state is a poverty trap that pushes millions to seek opportunities in the cities. If we attract enough investments in agriculture, we could actually reverse the migration pattern.

By 2022, the Duterte administration aspires to elevate our economy to high middle-income status comparable to where Malaysia and China are today. In a generation, we aspire to achieve high-income status with a negligible poverty percentage.

In the six years preceding, we did register a rather impressive growth. But it was growth built on the economics of exclusion. As the domestic economy expanded, the rich got richer and the poor became poorer. That is not the pattern of growth that should continue. At the forum that opens tomorrow, we hope all the bright minds assembled will help us truly build inclusive growth.

Our poverty rate is deeply rooted. In the colonial period, so much of our land was devoted to supplying the colonizer nations with the raw materials they needed to build their own wealth. Land monopolies were consolidated, creating a landed elite that also controlled our politics. Subsistence agriculture created the large mass of the rural poor.

Our economic base is not contiguous like Thailand’s for instance, or China’s. We are an archipelago. Our land is broken up into 7,100 islands. We need to quickly improve our domestic logistics system so that regions and islands are not left behind.

President Duterte aims to be the one to crack the riddle of our poverty. That is why he wants to break the back of the drug problem in only six months: so that he can spend the rest of his term tackling the poverty question. Building inclusive growth is part of his final social-economic reform agenda.