As PHL votes, experts say good governance is crucial for recovery
THE NEXT Philippine president needs to immediately restore public trust in the government, strengthen democratic rule, and pursue major economic and political reforms, analysts and industry experts said on Sunday.
Filipinos will head to the polls today (May 9) to choose a new set of leaders who will oversee the economy’s recovery from the pandemic.
“The campaign period evolved to be very divisive, which the next president should successfully address by building coalitions from an array of political forces,” said Robin Michael U. Garcia, a political economy professor at the University of Asia and the Pacific.
“Compromises have to be made to achieve stability toward postpandemic recovery,” he said in a Messenger chat.
Cielo D. Magno, a professor at the University of the Philippines’ School of Economics, said there is so much “uncertainty” in the economy right now because the two leading presidential candidates are significantly different in terms of their economic plans.
Political observers said that the 2022 presidential contest has become a two-way race between the only son and namesake of the late dictator Ferdinand E. Marcos and Vice-President Maria Leonor “Leni” G. Robredo.
Ms. Magno noted that investors are likely to continue their investment plans in the Philippines should Ms. Robredo win given her “solid” economic recovery plan.
“On the other hand, we hear Ferdinand Marcos, Jr. making irresponsible promises which shows his lack of understanding of basic economics and current trends,” she said.
“The challenge for the next administration would be to restore investor confidence, manage the pandemic well and adopt sound policies that would help the economy recover. We need the administration to champion good governance and the rule of law,” she added.
The Philippine economy is poised to bounce back from the pandemic this year, with the government projecting a 7-9% gross domestic product (GDP) expansion.
However, multilateral agencies gave below-target forecasts for Philippine growth due to the impact of the Russia-Ukraine war and the ongoing pandemic. The International Monetary Fund (IMF) gave a 6.5% GDP growth projection for the Philippines this year, while the Asian Development Bank and the World Bank gave 6% and 5.7% growth estimates, respectively.
A GlobalSource Partners Philippines note dated May 2 said the next administration needs to build on the Duterte administration’s reforms to attract more investments and to achieve the prepandemic GDP growth of 6-7%.
Ms. Magno said Mr. Duterte’s successor needs to craft a clear policy on how to attract big investments and sustain existing ones, particularly in the information technology - business process outsourcing (IT-BPM) industry.
“Unreasonable policies like removing incentives if workers will not physically report to office should be abandoned,” she said, referring to a directive requiring registered IT-BPO enterprises and many of their workers to return to the office.
Francisco “Coco” Alcuaz, Jr., executive director of the Makati Business Club, said Mr. Duterte’s populist attacks on some sectors of the business community and “favoritism for others” have made investors wary of investing and expanding in the country.
“The next president will need to make unmistakable statements and actions to reverse that and accelerate job creation,” he said in a Viber message. “We believe democracy remains the best environment to create jobs and improve lives. Losing democracy and freedom would be expensive.”
Zyza Nadine Suzara, a public finance expert and executive director of I-Lead, said Mr. Duterte will step down by the end of June with a record amount of debt, which swelled to a record high P12.68 trillion as of end-March.
“The next administration should manage the debt by improving revenue management and expenditure management,” she said in a Messenger chat.
Ms. Suzara said the next Philippine leader should implement public financial management reforms that will not only strengthen revenue collection efforts but will also fix public expenditures and government spending performance.
“The next president should do away with wasteful spending, plug leakages in the national budget and spend on the most urgent needs to keep the debt from skyrocketing, she said, adding that a culture of good governance and institutionalized transparency would boost business confidence.
The next president should craft a “people-centered” and “inclusive” national budget that will drive recovery, Ms. Suzara said. She noted the next government will face a number of fiscal challenges, such as finding funds for health, education and social protection programs.
Ibon Foundation Executive Editor Rosario de Guzman said the next administration should immediately conduct an audit on government borrowings as it has been observed that barely 10% of the borrowings have gone to the pandemic response.
“The next president should have a comprehensive program that capacitates the economy and ensures that debt is productive and eventually payable,” Ms. De Guzman said in a Messenger chat. “This includes leading investment in value-adding sectors such as agri-fishery, manufacturing, social infrastructure, small auxiliary enterprises.”
The Philippines has borrowed P1.31 trillion and received grants worth P2.7 billion for its coronavirus response from 2020 to Jan. 14, 2022.
BUSINESS CONCERNS
For Philippine Exporters Confederation, Inc. Chairman George T. Barcelon, the next administration should streamline the requirements for exporters and relax the rules on bonded warehouses as they continue to face supply chain disruptions.
“With the worldwide congestion and the disruptions in supply chain that led to the increase of shipping costs, the challenges facing the exporters must be addressed,” he said by telephone.
Mr. Barcelon said the next Philippine leader should have a strong experience in working with both the public and private sectors to address the challenges in the export industry.
Foundation for Economic Freedom (FEF) president Calixto V. Chikiamco said the next president should also immediately address the country’s energy supply issues, food insecurity and high inflation.
“The next administration should also take advantage of favorable geopolitical events, such as the deglobalization as the West decreases links to China and shifts production to ‘trusted’ partners and the rising demand for minerals due to the shift toward electric vehicles,” he said in a Messenger chat.
FOREIGN POLICY
The Philippines is a key stakeholder in the conflict in the South China Sea, a key global shipping route that is subject to overlapping territorial claims involving other Southeast Asian nations.
“The election of a new president provides an opportunity to re-evaluate the direction of the Philippines’ foreign policy considering strategic alliances and partnerships, and its role in global and regional affairs,” said Dindo C. Manhit, president of think tank Stratbase ADR.
He said the next administration should immediately formulate a new national security strategy based on a United Nations-backed arbitral ruling in 2016 that invalidated Beijing’s claims to more than 60% of the sea based on a 1940s map.
“A strategic Philippine foreign policy must consider economic diplomacy as one of the means to harness the contribution of both state and non-state actors in national development and international diplomacy,” Mr. Manhit said in a Messenger chat.
“We should enhance security partnerships with countries that share our democratic values and leverage on existing and newly formed multilateral organizations that are committed to maintain the rules-based international system.”
The next administration should also lay the foundations for long-term reforms while addressing urgent concerns, Michael Henry Ll. Yusingco, a research fellow at the Ateneo de Manila University, said.
Mr. Yusingco said the next six years could either be a repeat of the Duterte administration or an elevation of crackdown on dissent “in the name of national unity.”
“Or it could be six years of all of us working towards institutional reforms with clear and achievable goals in mind.”