A foreign-designed economic development plan

May 18, 2015 at 10:28

AT GROUND LEVEL By Satur C. Ocampo (The Philippine Star) | Updated May 16, 2015 – 12:00am

Under no other administration than President Benigno Aquino III’s have foreign business chambers exercised so much influence in determining the economic development priorities that the government must pursue during its term and beyond.

In fact, the P-Noy government proudly acknowledges that its six-year Philippine Development Plan is essentially derived from an advocacy paper, titled “Arangkada Philippines,” prepared by the Joint Foreign Chambers of Commerce in the Philippines. (JFC members are the American, Australian-New Zealand, Canadian, European, Japanese, and Korean chambers plus the Philippine Association of Multinational Companies Regional Headquarters, Inc.)

The advocacy paper’s ambitious targets: generate $75 billion in new foreign investments, 10 million jobs, and over P1 trillion in government revenue within a decade. To achieve these targets, the JFC wants the government to focus on rapidly developing what it touts as the “seven big-winner sectors,” namely: agribusiness, business processing offices, creative industries, infrastructure (airports, roads, railways, seaports, telecommunications, power and water), manufacturing and logistics, mining, and tourism (medical, travel, retirement).

With just 13 months remaining for the Aquino presidency, a lot of problems beset its development plan. Meantime, the JFC and its leading members (American and European) are pressing Congress to pass several economic bills – some creating new laws, others amending or repealing existing ones – that would principally benefit foreign investors.

Addressing an Arangkada Philippines forum in January 2012, President Aquino unabashedly acknowledged that he had adopted the JFC recommendations even before he won the presidential race in May 2010. Truth is, he pointed out, the “seven big-winner sectors were part of my platform during the 2010 election campaign,” deeming them as the primary areas of growth that represented “the global competitive advantage of the Philippines.”

P-Noy said in 2012 that the particular focus for his administration was on the BPOs, tourism, infrastructure, and agriculture because “they tend(ed) to promote inclusive growth.”

How has his administration performed on these sectors since then? It may be conceded that the BPOs and tourism have done relatively well, for instance, in generating employment and foreign exchange revenues. But it’s a different case for agriculture and infrastructure.

Agriculture’s budgetary allocation was increased by 51.3 percent to P53.3 billion in 2012. P-Noy optimistically projected that rice self-sufficiency by 2013 “remain(ed) a plausible goal – as opposed to the impossible dream it was just a couple of years ago.”

Yet, after more than three years of generous funding rice self-sufficiency appears to have slipped back to being an impossible dream.

In February the Philippines imported 500,000 metric tons of rice via government-to-government deals with Thailand and Vietnam, besides 163,000 MT allowed under the World Trade Organization minimum access volume program. More importation by the National Food Authority is reportedly being considered to meet the “mandated stocks” during the lean months starting in June.

The dismal performance of the agricultural sector has worsened the distress of the two million poor farming families and 30 percent of the labor force who depend on it. In 2014 agriculture contributed a measly 0.2 percent of the 6.1 percent GDP growth rate – whereas in 2010 it accounted for 12 percent of GDP (per a study by the Philippine Institute of Development Studies, which backstops the National Economic and Development Authority).

Aggravating such poor showing, the Commission on Audit reported in April that the Department of Agriculture, up till 2013, had wasted P14 billion of regular fund allocations and those from the PDAF (Priority Development Assistance Fund) and DAP (Disbursement Acceleration Program).

In similar deep trouble is infrastructure, particularly transportation in the National Capital Region (insufficient capacity for the passenger volumes, and decrepit conditions of the MRT, the LRT, and the Philippine National Railways), with many inadequacies too in airports, seaports and other facilities in the other regions.

The 2013-2016 Comprehensive and Integrated Infrastructure Program — which lists 3,077 priority projects requiring P6.58-trillion investments to be undertaken under Public-Private Partnership mode – took more than three years to be crafted. The program covers P3 trillion for transport-system projects; P1.37 trillion for social infrastructure (health, education, housing and services); P1 trillion for water resources; P847 billion for energy resources; and P89 billion for information and communication technology.

Thus far only 9 infrastructure contracts, costing P133.4 billion, have been awarded and signed. Most, if not all, of them are unlikely to be completed before the end of P-Noy’s term in July 2016.

On the JFC’s economic-legislation drive, the House of Representatives has passed on second reading three of its recommendations: 1) amending the Customs Modernization and Tariff Act; 2) amending the cabotage law (liberalizing the entry of foreign ships into Philippine ports); and 3) this week, the  which aims to reduce, if not fully eradicate, unfair competition, monopolies and cartels. (The Senate has already passed its version of this bill on third/final reading.)

The JFC has also been pressing Congress to pass new laws to rationalize/liberalize fiscal incentives for investors and to lower income and corporate taxes. The House targets to pass these by December.

Besides these, the American chamber wants Congress to amend/liberalize the Foreign Investment Act, Retail Trade Act, Government Procurement Act, Public Service Act and to repeal RA 3018 (which bans foreign participation in the rice and corn trade).

But the most controversial legislation being pushed both by the JFC and nine Philippine business groups is Resolution of Both Houses (RBH) 1, which if approved will have long-term economic, political and social implications for us Filipinos. Sponsored by Speaker Feliciano Belmonte Jr. and Sen. Ralph Recto, RBH1 seeks to amend/nullify the economic provisions of the 1987 Constitution that limit (to 40 percent) or totally bar foreign ownership or exploitation of land and natural resources, ownership of public utilities, media, and advertising industries.

Source: http://www.philstar.com/opinion/2015/05/16/1455180/foreign-designed-economic-development-plan

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Arangkada Philippines: A Business Perspective — Move Twice As Fast | Joint Foreign Chambers of the Philippines