P-Noy needs to take bolder steps

With less than two and a half years left in his term, P-Noy needs to take bolder steps to address the key problems of this country. He has to learn to venture out of his comfort zone. Otherwise, many festering problems will just get worse before his term ends.

Good intentions and token solutions don’t count. The President cannot think that just because he has a Conditional Cash Transfer program he has done his share in fighting poverty. The CCT is a stop-gap measure at best, a means to help the next generation of marginalized families to break out of poverty through better education and health care.

Fighting poverty means creating jobs… here at home. The foreign jobs help, but again sending Filipinos abroad and breaking up families was supposed to be a stop-gap measure too. It became somewhat permanent only because our leaders have failed to address the problem of joblessness at home.

According to the most recent SWS survey, the number of unemployed Filipinos swelled to more than 12 million in the last quarter of 2013. Imagine everyone living in Metro Manila jobless... that’s how many 12 million is. This makes the 7.2-percent growth in the country’s gross domestic product (GDP) last year, meaningless for 60 million out of our population of a hundred million, assuming each of the 12 million represent a family of at least five.

While it may look good on a press release to say that our GDP growth is the second-fastest after China, it is far from inclusive. Only the super rich benefit from it. Structural problems in our economy have created a kind of waterproof barrier that prevents any benefit from that kind of growth from trickling down to most Filipinos.

SWS data show that the unemployment rate went up to 27.5 percent as an additional 2.5 million Filipinos joined the ranks of the jobless between September and December. The level of joblessness across the country was almost six points higher than the 21.7 percent (some 9.6 million) in the previous quarter.

Across age groups, joblessness remained highest among those 18-24 years old (52.3 percent). It was 33.1 percent in the 25-34 age bracket, 25 percent in the 35-44 age bracket and 17.7 percent among those 45 years old and older. That must be what Pope Francis is talking about as the joblessness of the youth, an urgent problem of our times.

Jobs are created by right policies that create the right business climate. No one, Filipino or foreigner, will invest in this country unless the climate is right. Inadequate infrastructure, corruption and bureaucratic red tape, unfriendly laws and local regulations and having the best justice system money can buy all conspire to keep our fair share of investors out.

Just early this week, a news release from the Bangko Sentral proudly announced that foreign direct investments (FDIs) rose 54.9 percent in November last year to $286 million. Before you get totally impressed, the percentage number comes from a rather low base number compared to our peers in ASEAN.

Actually, that seemingly impressive number brought the year-to-date total to $3.65 billion, better than the $2.67 billion in the same period the year before. But economist and National Scientist Raul V. Fabella observed that “our investment rate (capital formation over GDP) still stands at about 19 percent in 2013 in a region where 30 percent is normal.”

Here are comparative FDI data as of 2012 from the World Bank in US$: $2,242,980,000 Myanmar; $2,797,000,000 Philippines; $1,557,134,885 Cambodia; $8,368,000,000 Vietnam; $9,733,616,207 Malaysia; $19,618,049,398 Indonesia; $10,689,324,361 Thailand; and $56,651,074,727 Singapore.

Forget Singapore and even Indonesia, Thailand and Malaysia. We are competing now within the second tier of Asean countries and given the widely publicized interest in Myanmar, I will not be surprised if the once hermit country will soon overtake us, if it hasn’t done so.

Yet, when ASEAN was formed, we were ahead of the pack. I know for a fact that even the capitals of all those ASEAN countries looked less impressive than Manila not too long ago. Even Singapore was just getting started when I first made a tour of ASEAN countries as a UP Student Council delegate in 1969. Anyari???

Speaker Sonny Belmonte, in a message to the Joint Foreign Chambers, gave us a succinct analysis of what’s ailing our economy. It is worth noting, the Speaker observed, that despite their relatively lower economic growth rate in recent years, our neighboring countries continue to enjoy low unemployment rate.

“A striking feature of these countries is that they are more open compared to the Philippines. They have managed to attract more foreign investments, and to export more than the Philippines. Consequently, they have bigger industrial and manufacturing sectors, and their economic growth have largely been driven by investments and exports, critical contributors to success in job creation and poverty reduction.”

We somehow give the impression to the world that our investment climate is less than hospitable because of the constitutional restrictions. Worse, these restrictive economic provisions have outlived their usefulness. These are even causes for corruption as some investors, the type we would rather not have, use Filipino dummies to comply with the Constitution.

In an era of economic globalization, the provisions seem out of place. Even communist countries like China and Vietnam are more liberal with their investment rules.

Defending his stubborn stance on relaxing the restrictive economic provisions in the Constitution, P-Noy said he wants to be shown the reason why we need to change anything in the Constitution... P-Noy fears disruption in the short term and wonders if the disruption is worth the anticipated benefits.

The President often says he could not see why the Constitution is being seen as an economic hindrance when a country like China, which never allowed foreign ownership, posted 10 percent growth for a decade. 

Oopps… China? P-Noy seems misinformed about China and its economic strategy.

For P-Noy’s information, China has allowed 100 percent foreign ownership of companies since 1979. Go ask the SM Group of Henry Sy who has malls in several cities in China, George Ty of the Metrobank Group who runs a full service bank in China; Carlos Chan of Liwayway Marketing (OISHI) who now has 14 factories all over China or Lucio Tan who owns a hotel and a property business in China. China did not require them to get Chinese partners on a 60/40 basis as we do here. They own their businesses there entirely.

P-Noy has to realize that the stiff opposition to relaxing our restrictive economic provisions is coming from elements from the old oligarchy who are afraid of world class competition. This is the oligarchy that demanded and got market protection for decades for infant industries that never grew up. Only global competition will keep those oligarchs honest and give Filipino consumers a break.

What P-Noy should do now is give his blessings to the proposal of Speaker Belmonte and Senate President Frank Drilon for a simple amendment to the Constitution’s economic provisions that adds the phrase “unless otherwise provided by law.”

Cagayan de Oro City Rep. Rufus Rodriguez, president of Centrist Democratic Party of the Philippines, rightly pointed out that the President loses nothing with this amendment. Congress must still pass a law for every industry to be liberalized and the President can veto it. The thing is, we are able to go tell the world that we are open to change to make our Constitution more hospitable to investments.

Rep. Rodriguez said P-Noy seemed interested. “I told him, Mr. President, your administration achieved 7.7-percent economic growth. If we have more foreign investments by opening up certain businesses to full foreign ownership, we can attain at least 10 percent. He was intently listening.”

Speaker Belmonte said there are only a few provisions that would be affected: those on land ownership, public utilities, mass media, educational institutions, and advertising.

The Speaker is of the belief that lifting restrictions in these areas will enable us to promote the country’s competitiveness and to expand growth. Hopefully, the painless Cha-cha plan of P-Noy’s congressional allies will win him over so we can get this done this year.

The clock is ticking and we have no time to lose. All those unemployed Filipinos waiting for jobs shouldn’t have to wait much longer. That’s the only way they can get out of poverty. Hopefully P-Noy can see that too.

A bolder P-Noy, one who will venture out of his comfort zone and act boldly, is the President we need today.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco