Let’s hear from NEDA: “Director-General and Economic Planning Secretary Arsenio Balisacan expressed confidence that Gross National Income (GNI) would improve sufficiently so that by 2025, the Philippines could be upper to a middle-income economy. That will be a remarkable achievement. The Philippines has been classified as a lower middle-income country since the World Bank produced its classification scheme – whether internally in the early 1980s or as officially published since 1989.
“In essence, the NEDA points out, the PDP’s over-arching objective is the revitalization of job creation and poverty reduction and the country’s return to its high-growth trajectory following more than two years of an economic slump brought on by the Covid-19 pandemic.
“The new five-year plan follows the framework of Ambisyon 2040, the country’s long-term development plan established in 2015. The government seeks to achieve the following in 2023: GDP growth target of 6.0 to 7.0 percent; Inflation and food inflation maintained at 2.5 to 4.5 percent in 2023 and 2.0 to 4.0 percent from 2024 to 2028; narrowing of national government debt-to-GDP ratio from 63.7 percent this year to 48 to 53 percent by 2028.” [Manila Bulletin, 2nd Jan 2023]
What are we glossing over in the upbeat tenor of NEDA? For example, Vietnam overtook the Philippines’ GDP per capita in 2020. Moreover, they put poverty in the rearview mirror. How? By taking the playbook of the once Asian Tigers, “beg for foreign money and technology.”
Yet, we are still forging along the same path reliant on the OFW remittances and call centers, including the 6.0 to 7.0 percent growth metric.
In other words, we’re stuck in logical yet linear and incremental thinking. And that is despite decades of underperformance as an economy.
Consider: “We need the outright removal of the restrictive economic provisions to be more competitive and attractive to foreign investors. Liberalizing the distribution and transmission of electricity will help lower power costs and improve energy efficiency through increased competition. Doing the same for seaports would increase the Philippines’ trade logistics efficiency.
“To do this, both houses of Congress can pass a joint and concurrent resolution on amending or outright removing restrictive economic provisions in the 1987 Constitution upon a vote of three-fourths of its members. The amendments shall then be valid when ratified by a majority of the votes cast in a plebiscite. Note that we can amend the economic provisions without touching other areas of the Constitution.” [“Improving the Philippine investment climate,” Gary B. Teves, Philippine Daily Inquirer, 31st Dec 2022; Teves served as finance secretary under the Arroyo administration]
But what is the “flavor of the month”?
“THE most-discussed issue on agriculture in the last few days of 2022 was onions, usually a mundane concern, but now a topic big enough to attract national attention. A kilo of onions, the white kind used as a fill-in for burgers and the type with the most culinary use, breached P400 per kilo, which meant two kilos of chicken, or more than the price per kilo of scarce, domestically-produced pork. Meanwhile, another round of price surges for onions looms. Online sellers now quote between P450 and P500 per kilo, excluding delivery charges.” [“In 2022, agriculture sank deeper into the rabbit hole,” By Marlen Ronquillo, The Manila Times, 1st Jan 2023]
“With the country vulnerable to many external headwinds, the government launched a “30 by 30” initiative to produce 30 percent of its nutritional needs by 2030.
“Food security and inflation are related and are growing problems in the Philippines. The national average for food inflation rose from 6.5 percent in August to 7.7 percent in September. Of the food items, the foremost drivers of higher food inflation are sugar, confectionery, and desserts (30.2 percent), corn (26.2 percent), and oils and fats (20.1 percent).
“The big problem is the lack of productivity in our agricultural sector. Farming methods are antiquated, and the economics of agriculture impoverish the farmers while the government focuses on rice.
“According to the Philippine Institute of Development Study or PIDS, with traditional agricultural methods falling short, investing in new technologies is key to transforming the country's livestock, poultry, and dairy (LPD) industries.
“Many investments must be poured into production and process improvements, including technology, equipment, animal inventory, and workforce capacity upgrades, for the agriculture industry to be more competitive.
“Given the inefficiency of the agriculture department, perhaps the entry of big corporations will help increase our level of food security. There is good news. Metro Pacific and San Miguel have launched such projects.” [“Food security,” Boo Chanco, DEMAND AND SUPPLY, The Philippine Star, 2nd Jan 2023.]
In other words, we are in survival mode. And the thought of how Juan de la Cruz can “thrive beyond surviving” is way beyond us. Beggars can’t be choosers.
Juan de la Cruz is at the level of his physiological needs that he can’t see thriving or being self-actualized – or the Philippines is a first-world economy.
Take rice, our staple food. “All estimates point to a 2022 rice importation of at least 3 million metric tons, almost at par with the greed and profit-driven rice importation in 2019, the first year of the Rice Tariffication Law (RTL). Again, we will be the second-biggest rice importer in the world after China, a country that can justify its rice imports because of its 1.4 billion people and role as a “factory to the world.”
“Our record-high rice imports have failed to impact rice prices in a significant way, with today’s rice prices only slightly lower than rice prices pre-RTL. A small group – well-connected rice importers and traders – has been reaping the windfall from the scrapping of the quantitative restrictions on rice and the passage of the RTL.
“The impotence of this law in lowering rice prices for consumers did not prevent the previous government from adding an executive order for more liberalized food imports — rice included — on top of the RTL. Executive Order (EO) 171 further lowered tariffs on rice, corn, coal, and pork.” [Ronquillo, op. cit.]
In other words, the Rice Tariffication Law came with much fanfare as a response to food security. Yet, it is another example of logical yet linear and incremental thinking that we associate with technocracy. It is, again, merely a tool and, at best, a stop-gap measure to protect Juan, de la Cruz.
Why does the blog beat the Pearl River Delta Economic Zone no end? Because unless our technocrats and economic managers embrace serious benchmarking against the economic miracles delivered by our neighbors, we will be left reinventing the wheel and throwing decades upon decades of progress.
In other words, the Asian Tigers demonstrated to the world that rapid economic development cum nation-building is a reality, not a pipedream.
What do we keep missing? We’re stuck with addressing jobs, poverty, and inclusion and pursuing quantitative tools but no forward, lateral, and creative thinking.
We have no experience designing and assembling the requisite “ecosystem” to equip us to navigate the journey from poverty to prosperity. Moreover, as we take our caste system for granted, we won’t slay the dragon of political patronage and oligarchy.
Let’s hold it right there.
I am exercising academic freedom — an element of freedom, democracy, and the free market that I chose to represent in Eastern Europe — when I contrast the “academic” from the real world.
Consider these two examples: Those familiar with the blog may recall how I assisted a Ph.D. candidate in her dissertation. “I will only help you if you commit to addressing a real-world challenge.” And she did and employed her dissertation to manage the brand she worked for, elevating her to global marketing director.
And much earlier, when a South Korean group attended an innovation and global competitiveness course at an Ivy, I hosted them at my former Fortune 500 company. The lead professor was a friend, and with the opening of the former Soviet bloc, he organized a program in Prague and invited a group of us from corporate America to give them a crash course on innovation and global competitiveness.
What about the morality of modern economics, as raised by Elfren Cruz? “In her book “Thinking Like an Economist,” University of Michigan sociologist Elizabeth P. Bergman wrote that it was not until the 1960s that the discipline of economics began to have a serious role in policy making. From then through the mid-1980s, government agencies established economic and policy offices. These offices began shaping major policy decisions using such techniques as cost-effectiveness analysis, which searches for the cheapest way to achieve a goal, and cost-benefit analysis, which asks whether the goal is worth pursuing in the first place. These events have made economics much more prestigious and influential than history, sociology, and other disciplines. There was focus on the end goal rather than the process.”
Recall that the blog often speaks to the elements of cognitive development. The challenge of nation-building is beyond binary thinking and extends to “multiplicity” and relativism – or the imperative of context.
Unsurprisingly, neuroscience has influenced behavioral economics and distinguishes it from classical economics.
What do we keep missing? We’re stuck with addressing jobs, poverty, and inclusion and pursuing quantitative tools but no forward, lateral, and creative thinking.
It’s worth repeating: Vietnam overtook the Philippines’ GDP per capita in 2020. Moreover, they put poverty in the rearview mirror. How? By taking the playbook of the once Asian Tigers, “beg for foreign money and technology.”
Here’s an analogy to explain why Juan de la Cruz remains in binary thinking.
Look at how we drive our cars or motorbikes. Courtesy driving or defensive driving is not in our psyche. Because to get from point A to point B on our roads, we must be in “survival mode.” The wife would constantly remember that motorists keep the outer or emergency lane open in America. In the Philippines, we would take whatever space we find. Unsurprisingly, gridlock is the rule on Philippine roads, not the exception.
We don’t trust the system because ours is a dysfunctional one.
Think of our crab mentality. For example, we won’t prioritize and leverage Pareto because we are in survival mode.
“The Philippines ranks as the 15th most unequal of 63 countries. More than half of laborers with only elementary schooling or less are in agriculture. Household heads who are college graduates have an average per capita income fourfold higher than household heads with no more than elementary education.” [“Poverty and inequality in the Philippines,” Ernesto M. Pernia, The Philippine Daily Inquirer, 2nd Dec 2022.]
Nation-building “is no longer just economics. We must open our eyes and focus on a bigger canvas, not just economic indicators. Still, most social, political, and other inequality indicators frustrate our efforts to build social cohesion and unite people around certain reforms.” [“PHL urged to focus economic policy on keeping middle class prosperous,” BusinessWorld, 24th Nov 2022]
Of course, we have world-class businesses and entrepreneurs, yet we can’t ignore that ours is a dysfunctional system.
“JFC'S founder, chair, and “chief taste officer” (CTO), Dr. Tony Tan Caktiong, ranks among the genuinely world-class entrepreneurs in the likes of Jack Ma of China and Jeff Bezos of the United States.
“A FEW MONTHS AGO, TAN CAKTIONG WAS CHOSEN AS THE SOLE AWARDEE of the “RVR Award for Nation Building” by its sponsors: the Phinma Corp., the Asian Institute of Management (AIM), and the Manila Jaycees.” [“World-class Filipino enterprise,” Artemio V. Panganiban, WITH DUE RESPECT, Philippine Daily Inquirer, 2nd Jan 2023]
What do we keep missing? We’re stuck with addressing jobs, poverty, and inclusion and pursuing quantitative tools but no forward, lateral, and creative thinking.
We have no experience designing and assembling the requisite “ecosystem” to equip us to navigate the journey from poverty to prosperity. Moreover, as we take for granted our caste system, we won’t slay the dragon of political patronage and oligarchy.
What to do?
Let’s quote from an earlier posting: “Ramon Ang’s Bulacan initiative, beyond the Bulacan airport, must mirror the Pearl River Delta Economic Zone ecosystem and generate “incremental” exports of $200 billion. That will pave the way for the Philippines to match the export revenues of our neighbors. And which is how Vietnam eliminated poverty.
“As the blog has raised, the BOI must be in the crosshairs to assume this challenge and toss our historical models in crafting investment incentives.
“And recall, the blog challenged the Philippine president to invite the most prominent investors, especially in technology like TMCC, Samsung, and Apple, personally and pick their brains on how the Philippines can match if not outdo the neighbors' efforts. Mahathir did this by creating a tech advisory group that included Bill Gates.
“And last November, Zelensky of Ukraine signed an investment partnership with the CEO of BlackRock CEO Larry Fink. BlackRock is the world’s largest asset manager.”
Let’s hold it right there.
We have over 400 export processing zones under the PEZA. Yet, we generate the most negligible export revenues. How many more export processing zones are we contemplating, given the NEDA 5-year development plan?
Sadly, we can’t wrap our heads around Pareto and distinguish the “vital few” from the “trivial many.”
Is the Philippine economy half-full or half-empty?
What are we glossing over in the upbeat tenor of NEDA? For example, Vietnam overtook the Philippines’ GDP per capita in 2020. Moreover, they put poverty in the rearview mirror. How? By taking the playbook of the once Asian Tigers, “beg for foreign money and technology.”
Yet, we are still forging along the same path reliant on the OFW remittances and call centers, including the 6.0 to 7.0 percent growth metric.
In other words, we’re stuck in logical yet linear and incremental thinking. And that is despite decades of underperformance as an economy.
Gising bayan!
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