Operationalizing national development

In the second week of this year, President Marcos reorganized his economic team with the sweeping appointment of two major officers: a new presidential assistant with the rank of operating Secretary with coordinative powers over existing departments and replaced his Finance secretary.

Economic reorganization. Frederick Go was appointed to the post of Special Assistant to the President on Investment and Economic Affars (SAPIEA). Ralph Recto, the new secretary of Finance, is a former senator and congressman, who has Cabinet experience as NEDA Secretary and who, as legislator, had steered the passage of some tax laws.

In my column of Dec. 20, 2023, I discussed the creation of the office of the SAPIEA.

It surprised me that the SAPIEA was given powers to coordinate other economic departments of the government since the President is the chairman of NEDA and he ultimately directs and makes decisions on the national economic development plan under the NEDA.

Decisions on investments and economic policy are taken during the meetings of the NEDA Board that the President chairs. Within the context of a private enterprise economy, realizing increased investments by domestic and foreign investors is the ultimate reward.

The reorganization at the top of economic management can only be explained by impatience for action and for raising the quality and volume of private investment responses to existing government plans.

More can be achieved that is not happening sufficiently even if there is some perceived success.

Yet, it must be said that during the first year and a half of the Marcos administration, much has been accomplished in pushing the heady pace of investments in public infrastructures and in trying to reap the rewards from the major legislative achievements of the previous administration on economic matters.

These were the fiscal and investment reforms under CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) and three laws that further liberalized foreign direct investments concerning public utilities, retail trade, and amendments to the Foreign Investment Law.

In fact, government approvals of private investment proposals for domestic and foreign direct investments amounted to P 1.1 trillion since it took office to the end of 2023. It must, however, be pointed out that investment approvals are only prospective investments. (Converted to the peso current exchange rate, this amounts to $20 billion in investment approvals. Around $15.5 billion of these were approved by the FIRB [Fiscal Incentives Review Board] and $4 billion by the IPAs [Investment Promotion Agencies, such as EPZA]. A substantial part of these investment approvals are from foreign direct investments.)

More effort in the future is needed to make private commitments to investment into actual reality – as realized investments that benefit the nation in terms of employment, new incomes, and new technological achievements within the economy.

Within the framework of these economic accomplishments, the tenure of former Secretary Benjamin Diokno at Finance, who oversaw a stabilization of the country’s fiscal finances, has done a good job at his post. As evidence of this, President Marcos amply thanked Diokno for his service and appointed him back to the Monetary Board at the Bangko Sentral, an important though less stressful job).

Criterion: successful past business experience. The new appointments by the President show that he values past business experience as a key element in the choice of the next managers.

Investment and economic affairs coordination. Frederick Go, had previously steered Robinson Land Corporation as president and CEO into a large and successful enterprise of the Gokongwei’s Summit Group of Companies.

Go had served as an economic adviser, along with other private businessmen who accompanied President Marcos on his trips to foreign countries, as the newly elected leader tried to entice and to familiarize foreign leaders and investors on the economic opportunities that await them in the Philippines. In the position of economic adviser, the president found in Go the qualities that are essential to his new post.

On his appointment as SAPIEA, Go listed his main goals: “To attract strategic investments into our country calls for, first, improving the ease of doing business; second, reducing friction costs in business; and third, finding solutions to navigate the bureaucratic challenges we face. We have to make a strong case to the world why they should invest in the Philippines.”

Finance. Ralph Recto, as the new Secretary of Finance, said in answer to a question on his priority, that he would continue the enactment of tax reforms to finance the country’s economic development.

Recto essentially pointed out where the battle for financing our development is fought: in the legislature and in the political sphere.

The President has decided he needs an experienced politician to steer that process.

More business experience in government. I will close today’s commentary by pointing out that appointments in two major agencies are along the same theme of business experience being a key element in the appointment.

The new Secretary of Agriculture who was appointed in November last year– Francisco Tiu Laurel – is a businessman with strong experience in the fisheries sector. Laurel is a descendant of the Frabelle Fishing Corporation, a deepsea-fishing operator. Although agriculture involves much more production activity on land than on aquamarine areas, the fisheries sector is linked with the country’s food security needs, like agriculture itself.

After a year and a half of leading the Agriculture department himself, the President decided to appoint Laurel to the post. As a businessman, his knowledge of value-chain in food issues, among others, appears to be an advantage in strengthening the agricultural sector.

At the Subic Bay Maritime Authority, the operating arm of the Subic Bay Freeport, the President appointed a well-known logistics operator with experience in the freeport itself. The appointment of Eduardo Aliño was highly praised by business locators in that agency for his understanding of the practical issues of running the business services aspects of the SBMA.