What do we want to see for Year 2 of the BBM administration?
Barring any major global upheavals, the current government should be able to build on the gains made by previous administrations to strengthen the economy. The latest growth projections have shown positive developments on gross domestic growth (GDP) numbers higher than other countries in the region.
During the first quarter of 2023, the economy expanded by 6.4 percent year-on-year, and this would seem to keep within similar levels in the second quarter. Our neighbors have shown lower growth levels, with Vietnam and Thailand showing weaker results than everyone in the pack.
In the coming months, the challenge is not just to keep growth at even keeling, but to prevent it from sliding down to markedly lower levels like Thailand’s 2.7 percent or Vietnam’s 3.3 percent.
These two countries are often always benchmarked against the Philippines, although our fundamental growth drivers are different, with the dissimilarity most marked in our reliance on remittances by overseas Filipino workers and Filipinos living as emigrants in other countries.
Unabashedly, money sent by Filipinos from abroad have saved the Philippine economy multiple times, and have served as a reliable plug that prevented the dam from draining its life waters during many crises.
For example, during the pandemic when extended lockdowns were in place, Filipino families staved off starvation and surprising survived in better shape than many in other countries, thanks to the continued inflow of financial help from their relatives and close kin abroad.
In fact, year after year, total remittances have increased, often to record highs. No doubt, without these monies coming in, impaired consumer spending levels in the country would have sunk the whole economy since the country is a laggard in terms of productivity of many sectors, from agriculture to services to industry.
Focus on MSMEs
If the Philippines were to improve on the above, economic growth would easily surpass the seven percent mark. Such grounded fundamentals would have made us an impeachable tiger economy in the region.
That said, as the BBM administration enters its second year, more attention should really be given to strengthening the country’s other pillars of growth to solidify growth in the medium- and long-term. My favorite areas remain agriculture and local entrepreneurship, given the still huge number of Filipinos in the country who do not earn enough to transition to middle-income status.
Promoting local entrepreneurship is about pouring the necessary support to the development of micro, small and medium enterprises (MSMEs). Not only is credit availability a problem for the expansion needs of MSMEs, improved ways of business needs to be given attention.
As consumer spending continues to strengthen, MSMEs must be able to take advantage of all the money that is going around to improve their production capabilities. Many of consumers’ basic commodities are imported, notably China and the United States.
The most ridiculous example of our dependence on importations is with salt. Our laws have killed the local salt-making industry, and shifted supply lines to be almost totally dependent on importations, all because we were not able to provide the incentives and technical help for our salt industry to establish iodizing technologies.
We have given up of clothing manufacture in favor of imports from China and other smaller countries, when we continue to have a young population that needs new clothes yearly to replace what they have outgrown.
Our local livestock sector continues to flounder. We now import more pork and chicken for fast food chains. Shouldn’t the government put a program to boost local business capability to set up the necessary technology to cater to processed meat requirements?
A strong MSME no doubt can provide more and better jobs to tens of millions of our countrymen, thus opening new wealth avenues to those at the lower-income levels and providing the channels that can lift up close to 20 percent of the population who live in poverty.
Encouraging private investments in agriculture
Agriculture remains neglected, and this does not only call for more funds in the sector, but also much improved programs that can really boost land productivity and make agriculture profitable for farmers, fisherfolk, and livestock growers.
The government must go beyond paying lip service to its aspiration of ensuring the country’s food security and to actually come up with a doable programs to strengthen rice production, reduce corn importation to the barest, invest in the farming of other grains essential to our food needs, and protect land for food production.
We need to bring in private investments in local agriculture, and admit to ourselves that the government is not in the best overseer of land productivity for food. How many laws have been passed, for example, to support local rice production by our small farmers?
Perhaps, it is time, in the interest of rice self-sufficiency, to support a pilot project involving private business to bring back profitability to rice farming. This would likely entail overriding some provisions of current laws, but could pave the way for its much-needed revisions and updating.
Agriculture should be given immediate attention with the increasing risks that come with over-reliance on global supply chains and the changing climates. Once countries that provide for our imported food needs are jeopardized by droughts, flooding, typhoons, and other weather disturbances, inflation immediately rears up.
For a country our size with almost 110 million, the last thing our people would want to worry about is finding food – or buying it at elevated prices.
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