Roadmap to 2016
This year, according to Cabinet Secretary Jose Rene Almendras, the Aquino administration is going to create “a roadmap to 2016.”
Almendras happily noted that PNoy has been invited to the World Economic Forum (WEF) this week in Davos, Switzerland, to address a forum on the sidelines of the annual gathering of world leaders.
“Great, successful businessmen all over the world are interested in meeting President Aquino,” Almendras told ANC. “The international community is very happy with what he’s done.”
The optimism is not misplaced. Business confidence is high, the nation’s credit rating is one notch below investment grade, the stock market keeps hitting new highs, and the economy was one of the best performers in the region last year. Work on several big-ticket infrastructure projects are expected to get underway in 2013.
Still, those projects are too few to meet the nation’s immense needs. And despite the rosy economic growth figures, we’re still a regional laggard in terms of job-generating foreign direct investments.
Investors I’ve talked with – whether based here or in other countries – have expressed a common concern: they like what they’re seeing these days in the Philippines, but will the reforms last?
Specifically, they wonder whether the reforms will survive the leadership change in 2016. And micro-specifically, they ask whether business deals they enter into during PNoy’s watch will be honored by the next administration. We have, unfortunately, developed a reputation for weakness in enforcing contracts. Investors have found themselves punished here for the dysfunction in our political and judicial system.
P-Noy himself reinforced the atmosphere of uncertainty by freezing or scrapping certain big-ticket contracts in his first year in office, without making it clear why, and without filing cases against those who might have been responsible for supposed anomalous deals.
What else can be done now, except send the message that new rules are in place – and will be followed – to ensure that all deals will be aboveboard and will pass scrutiny by the new team in 2016.
It will also help if investors are given assurance that they have an avenue here for fair and speedy redress in case they encounter trouble in their Philippine operations. Certain foreign investors now insist on a clause in contracts signed here that in case of disputes, settlement will be through international arbitration.
Strengthening the rule of law should be high on the national reform agenda. The rule of law is one of the biggest investment come-ons of Asia’s most competitive economies, Singapore and Hong Kong.
Several reputable studies have shown that the Philippine justice system is seen by investors as snail-paced, unpredictable, and vulnerable to corruption and political intervention. This perception is one of the biggest disincentives to the types of job-generating investments that P-Noy hopes to attract under his watch.
The Supreme Court will have to take the lead on this, even as the senior justices continue to snub their new chief. P-Noy can do his part by appointing magistrates based on their qualifications rather than connections. Vice President Jejomar Binay may also have a role to play. Since his public approval ratings remain at the top and he has made no secret of his plan to seek the presidency in 2016, Binay may want to start sending clear signals that he isn’t going to reverse the reforms implemented by the Aquino administration.
If Binay says this, his potential rivals in 2016 will surely call him presumptuous. But he can say that whoever succeeds P-Noy – and not necessarily the current Veep – should continue the reform agenda.
Investors are closely watching the midterm elections for indications of whether the momentum of reforms will be sustained.
The results will give an indication of Binay’s chances in 2016. The Veep heads the United Nationalist Alliance (UNA); he is one of the party’s “Three Kings” together with former President Joseph Estrada and Senate President Juan Ponce Enrile.
UNA is nominally opposition. With P-Noy still enjoying unusually high popularity ratings, even with the recent dip, there is no real opposition at this time.
Binay has often said that he owes what he is now to PNoy’s mom Corazon, and he will never be an ingrate, whether to the departed mom or her only son. Binay is supported by P-Noy’s close relatives.
Perhaps Binay can go one step further and declare that he will be a keeper of P-Noy’s reform legacy. This will dispel the image Binay developed early on of ignoring reform initiatives, by being among the first to defy P-Noy’s ban on sirens or wang-wang.
Enrile, for his part, said last week that he still supported P-Noy, despite reports that Malacañang is backing moves for leadership change in the chamber. People are wondering about the shelf life of P1.6-million individual Christmas gifts for ensuring political support.
As for Erap, he was a friend of Cory Aquino, and he has no quarrel with P-Noy, although the race for mayor of Manila could change this.
UNA and P-Noy’s Liberal Party have started skirmishing, over the six- month suspension of Cebu Gov. Gwendolyn Garcia and the charges filed against Pangasinan Gov. Amado Espino (both UNA members), and over which party is leading in surveys.
But so far, UNA has avoided a direct confrontation with P-Noy. Instead UNA is focusing on Binay’s potential rival in 2016, LP president-on-leave Mar Roxas, who has supervision over provincial governors and other local officials.
Elections are always good for the Philippine economy. Wealth controlled by the tiny elite gets spread around. Meeting the huge demand for campaign materials creates jobs.
The elections, like the continuing massive remittances of overseas Filipino workers, will boost the country’s economic performance this year amid less-than-rosy forecast for global prospects.
The World Bank, in its latest twice-annual Global Economic Prospects, is projecting global growth at a tepid 2.3 percent in 2012, 2.4 this year, 3.1 percent in 2014 and 3.3 percent in 2015.
This year the World Bank is seeing another postponed recovery in the advanced economies, with the Eurozone and the US still problem areas. In developing countries, last year’s 5.1 percent overall GDP growth was one of the slowest in years.
In our neck of the woods, an unexpected plunge in investment growth in China is seen by the World Bank as additional bad news for the global economy.
Only the fittest will survive. We cannot be lulled by rosy economic figures that start from a low base compared to those of several of our neighbors. Gains must be consolidated. The world must be reassured that reforms now in place in our country will not vanish in 2016, and that more reforms are on the way.
We can’t afford to be smug.