“Government will just have to budget enough to get them those medicines for free. Still, having the budget and DOH being able to distribute effectively are two different things. The failure of DOH to distribute the medication COA found rotting in their warehouses is a mortal sin.
“There is room for government to expand expenditures for health care. Right now, the government’s share of pharmaceutical spending is only 15 percent compared to 91 percent for Thailand and 54 percent for Malaysia.
“Indeed, we ought to look at other costs of healthcare. Our out-of-pocket expenditure on healthcare (what we spend) is a high 54 percent compared to 12 percent for Thailand and 38 percent for Malaysia." [The other drug war, Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 13th Dec 2019]
Here’s something government perhaps knows, talking about the Philippines, Thailand, and Malaysia, for example, and their respective GDPs per capita (at PPP): (a) the Philippines has $8,400; (b) while Thailand is at $17,900; and (c) Malaysia with much more, $29,100.
In other words, when it comes to social programs, Thailand can spend 213 times more than the Philippines, and Malaysia, a staggering 346 more. The moral of the story? Given these two neighbors are wealthier than we are, we can’t expect to match their ability to deliver more benefits for their people.
Which brings us back to the challenge the Philippines faces, it is beyond tax reform: it is imperative to generate a much bigger pie or national income, as in Arangkada’s reason for being.
We must understand and accept that we can’t ignore the yawning gap in our nation-building efforts, i.e., we can’t keep silent and be in denial: We must step up to the plate and pursue industrialization aggressively like Vietnam is doing. Not only, but we must also gear our efforts to innovation and global competitiveness via foreign direct investment.
Sadly, we’ve kept our blinders and embraced a protectionist economy and wittingly or not, paved the way for political patronage and oligarchy to dictate upon the course of the Philippine economy. It comes from our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy that ours is a culture of impunity.
In other words, we can’t problem-solve in a vacuum. Our instincts and mindset will always get in the way. It explains why we haven’t found the resolve to step up to the plate and acknowledge what PIDS said: “The problem with the Philippine case is that we seem to have skipped a step. We moved from agriculture to services without even industrializing. [Although] the country’s agriculture employment share was still high at 26% in 2016, its contribution to the country’s gross domestic product is declining due to the issue of productivity.
“From 2005 to 2014, a large portion of the country’s export portfolio [belonged] to integrated circuits, whose sophistication content is shallow compared to the average in the world market.
“The study found that the agriculture sector can move to produce more sophisticated goods such as woven twill and prime cuts of pork and poultry.
“[Although] production issues are plaguing the agriculture sector, we can build on the production structures of cereals, fruit mixtures, glycerol, and oils for us to produce agro-processed goods.
“[The] government can guide the shift towards industrialization, including strengthening industrial policy, as well as promoting competition, innovation, and science and technology research. [And] upgrade production capabilities by attracting investment from industrialized Asian neighbors, strengthening the link between industry and the academic community, encouraging manufacturing process innovation, and the financial sector is part of the various stages of production.” [Philippine exports’ value-added content stagnant since 1995 — PIDS, Jenina P. Ibañez, BusinessWorld, 17th Nov 2019]
In the meantime, we make do with the following income streams: (1) OFW remittances; (2) BPO industry; (3) the Top 8 listed companies in the Forbes list; and (4) we like to add POGO.
What’s the point? These income streams cannot generate what we need to get a big boost in national income.
The evidence? “Finance Undersecretary Karl Kendrick T. Chua explained this clearly: ‘We cannot dispute that the many industries receiving incentives have made valuable contributions to the economy and the Filipino people. Many of them are important. Still, given that the current system is poised to subsidize more than two-thirds of the economy. Policymakers need to make tough choices between which industries and activities to prioritize if we are to ensure that every peso we give away as a tax incentive yields a net positive benefit to society.’
“Citing a recent DOF study, Chua pointed out that the industries being granted tax incentives under the Board of Investments’ 2017 Investment Priorities Plan accounted for a staggering 69.4 percent of the entire economy.” [Tax reform delay, EDITORIAL, Philippine Daily Inquirer, 16th Dec 2019]
Have we forgotten Arangkada? It is one of our better chances in the pursuit of industrialization. We’re now into two administrations, so we must ask: “What happened to Arangkada?”
Consider: “The target is to create $75 billion in new foreign investment, 10 million jobs, and over P1 trillion in revenue for the Philippine economy within this decade.
“The original ‘Arangkada Philippines: A Business Perspective’ report published in December 2010 contained 471 policy recommendations that will accelerate the growth of seven big industry winner sectors and achieve certain targets in terms of revenues, foreign investments, and job generation.” [Significant gains in the plan to promote 7 ‘winner’ sectors, Amy R. Remo, Philippine Daily Inquirer, 24th Feb 2014]
On the other hand, this is what we are dealing with: “The poverty rates for 2018 has fallen to 16.6 percent of the population, from 23.3 percent during the last Family Income and Expenditure Survey in 2015. The fall is spectacular, considering that from 2003 to 2012, poverty rates have fallen only by about 5-percentage points from 30 percent to 25.2 percent.
“We are, however, challenged by another set of falls. The same factors that Habito pointed out to be the source of falling poverty have recently reversed their increasing trend. In particular, the contribution of manufacturing to gross domestic product growth has fallen to 0.5 in the third quarter of 2019. It was the lowest since the third quarter of 2011 when it contributed only 0.4.
“This is way below its average contribution of roughly 1.5 in the last 30 quarters. Similarly, investments posted its two consecutive quarters of decline from growing by an average of more than 12 percent during the same period.
“We, therefore, need to address the fall in manufacturing and investments soonest if we want to maintain the decline in poverty.” [Falling, falling…falling, Dr. Alvin P. Ang, EAGLE WATCH, BusinessMirror, 13th Dec 2019]
What are we seeing? In the private sector, it’s called “slicing the salami.” If you haven’t tried it, do it. It is another way to say, analysis-paralysis. Precisely why we must overcome our inward-looking bias and benchmark and why the blog consistently points to the Asian Tigers, China, and, more recently, Vietnam.
It also points to why our perceptive judgment is suspect; we lack the experience in development and nation-building. For example, Deng had to heed the advice of Lee and Mahathir to overcome China’s inexperience and its perceptive judgment. Thus, Deng pronounced, “To lift our people from poverty, we need Western money and technology.”
Let’s get back to the private sector to appreciate how they make performance assessments, for example. And here is one of Procter & Gamble: “Despite ten years of turnaround strategies and portfolio changes, P&G still suffers from: (1) Market share erosion and low organic sales growth; (2) Aging brands and a lack of breakthrough innovation; (3) Suffocating bureaucracy and excessive costs which create structural drags on the business; (4) Board complacency about, and rewarding management for, continued underperformance; (5) Weak corporate governance which entrenches existing problems; (6) Shareholder returns less than half that of peers’ over a decade; bottom quartile over most recent time frames; (7) Short-term thinking (selling businesses vs. fixing business, cutting ad spend last quarter, among others) that doesn’t address the root causes of P&G’s challenges” [Train Partners, 6th Sep 2017]
See above what PIDS said is the problem with the Philippine case.
Gising bayan!
“Why independence, if the slaves of today will be the tyrants of tomorrow? Moreover, that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]
“Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]
“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists, and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]
“National prosperity is created, not inherited. It does not grow out of a country's natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists. [A] nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]
“You have to have a dream, whether big or small. Then plan, focus, work hard, and be very determined to achieve your goals.” [Henry Sy Sr., Chairman Emeritus and Founder, SM Group (1924 - 2019)]
“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” [William Pollard, 1911-1989, physicist-priest, Manhattan Project]
“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]
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