A premature ‘yahoo’

If you are also doing a "Yahoo!" on the recent strengthening of the peso vis-a-vis the US dollar, and the bullish performance of the stock market, you might just be looking at the trees and not the forest.

This is basically what the members of the Economics and Political Science departments of the Ateneo de Manila were saying during a recent forum that looked at how the country’s economic and political development was progressing.

The crisis, they emphasized, is not the fiscal problem but something more fundamental; it is the growing concentration of economic power and wealth in a smaller segment of Philippine society, the weakeningm of our agricultural and manufacturing sectors, and the increasing ranks of the poor.

The fiscal problem by itself is not to be ignored more so in the light of a total public sector debt of more than P6 trillion and the increasingly high amount needed to pay government debts. Last year, 81 percent of the budget went to pay for combined interest and principal amortizations. For the current year, this is expected to go up to 90 percent.

The solution, according to the Ateneo think-tank, is not to raise taxes, but rather to improve the efficiency of existing tax collections. Corruption and tax evasion are problems that can be minimized as long as there is political will.

The government debt and its capacity to pay, therefore, are problems that rely on solutions that are not physically impossible to implement. There are serious structural and operational flaws in the collection of revenues, but they are surmountable.

The Bigger Problem

Looking at the government’s fiscal problem is like viewing the trees; to see the forest, in this case, is to be alarmed at the widening gap between the income of the richest one-fifth of Filipinos and the poorest one-fifth. This should serve as a signal that more fundamental and far-reaching reforms are needed.

Research data showed that the country has not been able to sustain whatever development it has achieved over the years. Economic growth was best described by the Ateneo group as "narrow, shallow and hollow." No wonder that all other countries in the region have surpassed us.

Capital formation over the last 20 years continues to be concentrated in a few families, industries and regions, notes the Ateneo research. This has created uneven levels of development that account for our economy’s perennial boom-bust cycle and elusive take-off.

In fact, compared to GDP, the country’s manufacturing sector steadily declined while the number of manufacturing plants in China, Thailand, Malaysia and Indonesia continued to grow.

Our export growth has been buoyed largely by electronics, which essentially has a minimal local added value and almost nil backward linkage to the economy. Thus, with the gross value of our manufacturing sector remaining at comparatively flat levels, it is easy to deduce that other sub-sectors – food processing, apparel, rubber, glass, fabricated metal, machinery, plastics – were not contributing.

Development Rut

According to the Ateneo economic team, the Philippines has failed to industrialize because owners of capital and land, aided and abetted by government, have maintained tight control that prohibits competition and increased productivity.

Particularly, trade liberalization measures continue to be characterized by backsliding and policy reversals that are often suspiciously protective of dominant vested groups, either by protecting the products they manufacture, giving them exemptions from duties, or disallowing entry of competitive imports.

Filipinos also have failed to get their act together because of a lack of collective spirit among various sectors to push a unified development agenda. There is no "kayang-kaya kung sama-sama," only "kanya-kanya."

Faced with all of these economic maladies, our hard-pressed countrymen are leaving the country to take care of their own personal economic problems. For many of them, giving up so much time away from their families and enduring heart-wrenching sacrifices are the price they have to pay to provide a decent life for their children.

When they come home, old and spent, nothing much will have changed. The rich will be richer, and – if there are still jobs abroad – they will have to send their children to work in foreign places to send home money for the monthly rent and food.

The real danger is that the country is getting lulled into a complacency that could just explode when the exported labor economy bubble bursts.

Exuberance Of Raw Talents

The sight was refreshing and uplifting. It makes you forget the difficulties of putting together an event composed of different groups with their own sometimes differing views of how things are ought to be. That was what the organizing committee of the Collegiate Champions League felt during the opening games of the on-going knock-out tournament for the Philippine Collegiate Champions Cup.

Pressured by a knock-out format, the struggle in the basketball court was fierce; each one tried to out-hustle the other to get the ball for their team and score the much needed points.

Even with all the bumps and bruises from the physical play, the raw talent of these aspiring stars of Philippine basketball relentlessly displayed their fighting spirit. At the end of the game, win or lose, it was warm handshakes and embraces.

All were winners last Friday at San Beda gym. The basketball fans who watched the games saw the excitement and intensity of collegiate plays; the players got the much needed exposure to competition; and the school officials strutted proudly the product of their athletic programs.

For the sponsors, particularly Petron, Smart, Air21, PCSO, Glaxo, SKF, Pascual Laboratories, Adidas and Wilson, it was sponsorship money well spent.

Watch the drama of collegiate competition unfold as the knock-out games for the Philippine Collegiate Champions Cup continue.

Egos Surround MMDA And City Mayors?

Ask the different mayors of the cities comprising Metro Manila about Metro Manila Development Authority (MMDA) and the common response is that MMDA is not a super-authority over local governments (unlike when it was headed by the First Lady Imelda during martial law days), and that it should not interfere with their work.

They are exasperated over the endless squabbling and bickering of even the smallest issue that distract them from attending to more critical local issues, the latest of these being the run-ins between local officials and MMDA in the "wet rag" scheme supposedly aimed at disciplining pedestrians.

At the same breath, however, they agree that there are common concerns and issues affecting the whole metropolitan area that need an overall integrated view and a fully coordinated implementation plan. They add, quickly, that this must be jointly agreed upon.

Can our local officials and the MMDA really work together under the present set-up where the city mayors zealously cling on to their independence and prerogatives, not to mention, their ego and arrogance since they were duly elected? On the other hand, the MMDA continues to criticize local officials for their lack of political will to implement their own ordinances and to think of innovative ways to perform their jobs.

As Dong Puno, a respected Philippine Star columnist, puts it, "Maybe just too many egos in the way." And in the meantime as the grandstanding, one-upmanship and spotlight grabbing continue, we are to endure traffic-chocked, garbage-strewn and flooded surroundings in a metropolis mindlessly growing.

Join us on "BREAKING BARRIERS" on Wednesday, 16th February 2005 on IBC TV-13 (11:00 p.m.) to gain insights into the views of Mayor Neptali "Boyet" M. Gonzales II of Mandaluyong City on issues related to Mandaluyong and its relationship with MMDA as the city plans for future growth.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.