2018: The Good, Bad and Ugly

2 018 should have been a banner year for the Philippines. If President Duterte’s campaign promises are anything to go by, drug cartels should have been obliterated by now, peace and order should be firmly entrenched across the country, the flaws of the 1987 Constitution should have been amended, Metro Manila’s traffic woes should be solved and the economy should be soaring at a 7.5% growth rate.

President Duterte promised us the moon but has so far only delivered rainclouds. After all the hoopla, he has not proven to be the “game changer” that everyone hoped he would be. At least not yet. 2018 was underwhelming, reform-wise.

So what were the political and economic highlights of 2018? It was a mix of good, bad and ugly.

THE GOOD

Last summer, the Commission on Audit exposed a P60-million ad placement made by then tourism secretary Wanda Teo on a non-rating TV show produced by her brother. This opened a Pandora’s box of graft allegedly orchestrated by Teo and then COO of the Tourism Promotions Board, Cesar Montano. Also uncovered was a P320 million rip-off called “Buhay Carinderia” and numerous junkets/promotional activities that were scandalously overpriced.

The exposé led to Teo and Montano’s forced resignation. This was the best thing that happened to the tourism industry. Replacing them were Bernadette Romulo-Puyat as DoT Secretary and Venus Tan as COO of the TPB. The industry is now under professional, experienced management.

Tourism is a vital component to the economy for its ability to pump in much needed dollar revenues in a relatively speedy manner. The country needs these revenues to help balance its widening fiscal deficit. In 2017, foreign inbound tourists generated some $8.6 billion on the back of 6.62 million visitors. For 2018, the DoT expects to have realized 7 to 7.2 million visitors, a tad below its 7.4 million target. An eight percent growth rate was realized despite the closure of Boracay and the empty coffers to spend on tourism promotions. This by itself is an achievement.

Another win is Secretary Romulo-Puyat’s focus on sustainable tourism. The six-month closure of Boracay was an exercise in political will, one that bodes well not only for Boracay but all other environmentally fragile destinations. The lessons learned in Boracay will be applied to other hotspots like El Nido, Siargao and Panglao.

The Philippines is poised to attract 8.2 million foreign visitors in 2019, generating $11 billion in revenues and 5.8 million jobs for our countrymen. Under Secretary Romulo Puyat’s baton, we are optimistic these targets will be met.

Foreign Direct Investments (FDIs).

In 2017, the country realized $10.2 billion worth of FDIs, the highest intake ever recorded. In the first eight months of 2018, FDIs already stood at $7.4 billion, 31% higher than the same period the year prior. The Department of Trade and Industry is confident that $12 billion in FDIs was realized in 2018.

Deserving kudos is the Board of Investments. The BoI ended 2018 with $17.5 billion worth of investment approvals, a new high from the previous record of $11.9 billion in 2017. The unprecedented figure represents a 47% increase.

What is notable is that a large chunk of investments will go towards upstream, heavy industrial projects that will allow the economy to produce technologically complex goods it was not capable of producing before.

The Manufacturing Sector.

The Philippines is in the midst of a manufacturing resurgence after a contraction that lasted three decades. From 2010 to 2017, manufacturing posted an average growth rate of 7.6%, outpacing the growth of the service sector. This shows that the country is well on track towards industrialization.

Food and beverage manufacturing leads the charge but headway was also made in heavy industries like auto and aeronautic parts, shipbuilding and chemicals.

The Philippines had the second best performing manufacturing sector in the region after Vietnam.

Build, Build, Build. I categorize government’s infrastructure program as a qualified “good.” I say this because while some projects have been completed or have started in 2018, many of the 75 keystone projects in the “Build, Build, Build,” program are de-