Getting more things done sans distractions

The 2010s is characterized by the rise of strongmen who banked their power on populist hysteria. They came with all sorts of excuses that before been considered unfathomable: protectionism, anti-EU, anti-Muslim, anti-refugee, pro-state dictatorship, trade wars, anti-liberalism.

From the Americas, to Europe, to Asia, these strongmen were ushered into power founded on a desperate clamor for change. “Who’s going to stop the migrants?” “Who’s going to challenge China?” “Leave the European Union!” “Away with traditional politicians!” Strongmen are often harshly criticized, but can play a catalyzing role in bringing about change.

The Philippines is no stranger to this emergent archetype, having Rodrigo Duterte elected as the country’s 16th and incumbent President by an overwhelming majority, including the support of the business community, in the May 2016 polls.

He had taken on a vicious war against drug users at the onset of his term, which gained him notoriety among human rights activists locally and internationally, but nonetheless retained his popularity among most Filipinos.

Duterte’s past political track record was largely focused on his stewardship of Davao City, which he held for about three decades. Thus, when he assumed his position as chief executive of the land, he decided to leave most of the complex economic policy-making for the nation to a core of respected and trusted people – and this has served him well.

Growing urgency

Now moving on to his last two years, with his term ending on June 30, 2022, there is a growing sense of urgency to get things done, in particular to put a closure to some of the still unfulfilled campaign promises, including carrying through with the promised Golden Age of Infrastructure.

The more populist election pledges are the return of the coco levy funds collected during the martial law years to coconut farmers, the full passage of the Comprehensive Tax Reform Program (CTRP), and the shift of the current government system to one that is based on federalism.

The first two will need more work at the legislative level. The two earlier proposed laws on the coco levy were subjected to a presidential veto on grounds that they would not benefit coconut farmers and would be vulnerable to corruption maneuvers.

A number of packages under the proposed tax reform program, including the much-awaited Corporate Income Tax and Incentives Reform Act, continue to be debated, with the Department of Finance pursuing that any losses in the reduction of corporate income tax collections should be compensated by revenues to be derived from the “rationalization” of tax incentives.

The President has apparently given up, upon the advice of his economic team, to change the current government to a federal system, and he has instead directed Congress to explore changing parts of the current Constitution.

Delays and realignments

The legacy economic reform of the Duterte administration is Build Build Build (BBB), originally an P8.4-trillion infrastructure program that would attempt to put on stream all the infrastructure projects that previous administrations were not able to get off the ground.

The latest update from the economic team took cognizant of the major delays caused by funding and financing challenges, right-of-way problems, and technical difficulties. Apparently, operationalizing the original planned 75 flagship projects was tougher than expected.

The list has been reassessed, and projects that are not feasible or difficult to implement have been culled. Noteworthy in the revised lineup of flagship projects, which has increased to 100, are those that will rely heavily on big business’ participation.

When BBB was first announced, public-private partnerships that the previous government had favored were junked as working against the interest of the Filipino people. Instead, Duterte’s economic team pushed for official development assistance (ODA).

Some ODAs, such as those from Japan or the Asian Development Bank, carried low interest rates with long repayment schedules and even payment moratoriums during the first years. But those from China, which was eyed to finance many of the flagship projects, turned to be costly.

More importantly, infrastructure projects require extensive studies that need lots of time before any financing arrangement can be approved.

Legacy-building

Still, things are moving forward. While the original amount has been scaled down by almost half to P4.3 trillion, more than 50 of the big infrastructure projects should be completed before 2022, while about 40 more are planned to start within the next two years.

Politics and corruption are some of the biggest stumbling blocks in getting things done. This is where Duterte’s role as a strongman will best come in.

Setting the stage for a more firm economic growth will require his unflinching commitment and unwavering focus, just as he had done so at the close of the year when he reaffirmed his support for the construction of the controversial Kaliwa Dam project.

The same level of commitment will be needed for other projects to move ahead, like the P736-billion New Manila International Airport project that San Miguel Corp. and the Department of Transportation have already signed on, but remains delayed.

At a time when there continues to be uncertainties in the global economic landscape, BBB will play a big role in ensuring that the Philippine economy will grow at the range of six percent and seven percent in the next years, well ahead of most countries in the Southeast Asian region.

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