Gov’t urged to forge stronger tieups with conglomerates

MANILA, Philippines — Economists and policy experts yesterday urged the government to form stronger partnerships with conglomerates as the weakness in public institutions puts the private sector in the best position to help the government spur inclusive growth in the country.

In a lecture titled Capitalism and Inclusion Under Weak Institutions delivered during a forum hosted by the Foundation for Economic Freedom (FEF), professor Raul Fabella of the UP School of Economics said the Philippines is finding it difficult to follow the  growth trajectories of China, Japan and Singapore because its institutions are not as strong as those found in these countries.

Because of this, an alternative then would be for the government to “re-channel” the resources, expertise, organization, and stability of conglomerates to provide public goods and services while keeping their activities well within the boundaries of the law.

“When enlisted, conglomerates can greatly boost the state’s capacity for public goods provision and attract foreign investment and resources,” Fabella said. “We can build on what we have and facilitate that.”

Enabling greater private sector participation in the provision of public goods, he said, would foster healthy market competition and give consumers more options.

He noted that other than pouring in resources into long-term infrastructure investments, conglomerates are also now pouring in resources into human capital development as seen in investments in “non-elite tertiary education” such as in the improvement of the facilities and faculties of schools such as Mapua, NU, FEU, National Teachers College and University of Nueva Caceres.

Fabella also noted that conglomerates have also been lowering the cost of telecommunication for poor consumers through retail prepaid credits. Private firms are also proving to be more able in providing piped water services to poor households.

Dindo Manhit, president of policy research body Stratbase ADR Institute, said neighboring countries in Asia sustained inclusive growth among their citizens because of the strength of their institutions.

“To be more inclusive, we need a strong and sustainable economy which traditionally, only come about with strong institutions. Since we cannot follow our neighbors in this path, the alternative is conglomerates,” he said.

“A greater partnership between the public and private sector is close to what my institution has been advocating for.”

Manhit said that while bright economic prospects boost investor confidence, “endemic corruption” and red taper persists in the government.

He noted, however, that with the passage of the Ease of Doing Business Act, bureaucratic red tape may be addressed. 

 “It can help address the decline in the country’s economic competitiveness globally especially in our region. In the end, however, there should also be a change in mindset among our officials and frontline government workers to focus more on the output rather than on the procedures,” Mahit said.

Manhit also urged the government to focus on lifting restrictions on foreign investments especially for areas related to providing public services.

Likewise, he urged state to promote stability and predictability of policies in industries to sustain confidence.

 “Take the volatile policy on the mining industry, for example. Already, the regulatory environment in the Philippines is far from agreeable. A prohibitive tax structure threatens to drive out badly needed investments to other mineralized countries that have more sensible tax structures,” he said.