Marching orders

There is a saying that “coins have two sides and people have two faces.” One has to view Philippine politics with equal doses of intrigue and frustration as we decipher the difference between what is being said and what the real score is. While most candidates are pitching the usual jobs, growth, corruption-free governments and transparency, one can only wonder what is really happening behind the curtain.

We live in a country of great economic inequality where the top five percent control over 70 percent of its resources. This ratio is completely reversed when we look at who will vote for our next leaders. Over 75 percent of votes will come from the D-E segment, while A-B-C will have, at best, 25 percent. Political candidates and leaders must therefore balance the right messaging to the masses while catering to the economic interests of the elite.

The key question is where do political and economic agendas converge? Our leaders must recognize these and focus resources behind these themes.

Personally I think we need to temporarily set aside our utopic desires and focus on practical goals. Expecting a corruption-free system is akin to saying people will no longer sin. I don’t see any choirboys on the ballot boxes or businessmen giving away 90 percent of their wealth. However, I do believe we can be very clear on the results that we want from a six-year term. Just like any business, it is easier to align people when we can first embrace a common vision and common result.

A clear and common vision would be “in six years the Philippines will have a GDP of over $350 billion and a per capita of over $3,250/person. Country debt will not exceed 50 percent of GNP. Major public transportation systems will have been implemented in Metro Manila and across the country, agricultural yields will have risen by 25 percent through the use of modern farming techniques, while the country continues to have a thriving local retail sector, BPO industry and strong OFW remittances. The Philippines will have attracted 10 million tourists per year by 2022 and mining exports will have reached close to US$10 billion.”

While the economic agenda of the next president will undeniably be complex and cover a vast range of sectors and issues, there are a few headline items that must be held sacred. Chief among all would be the country’s GNP growth.

Here is a shortlist of bulge-bracket deals that can significantly add to our country’s GNP growth and generate needed foreign reserves, employment and leading to a multiplier effect across the economy. We need policies that open up investments in those sectors, incentives that support small and medium players, and the launching of large bulge-bracket projects that serve as centerpieces that smaller projects can be bolted onto. Maintaining a minimum of five percent GNP growth over the next six years means adding $100 billion to our GDP by 2022. Where will the next president find $100 billion?

Infrastructure: Much needed are a mass transit system in Metro Manila; upgraded airports in key cities for tourism and trade; and additional highways to Tier 2 and Tier 3 cities (approximately 100 in the Philippines). The government can likely afford $50 billion worth of infrastructure projects over the next six years without negatively impacting our GDP-to-debt ratios. This in turn will increase investments in the country, solve critical issues such as traffic and generate employment. This adds $8.3 billion per year.

Mining: We have an estimated $1.3 trillion of gold in the ground. We have significant deposits of copper and iron ore. Tampakan, for example, has been cited to have the potential to generate $2.5 billion per year. This one project can bump up our GDP by one percent. Our entire mining industry exports approximately $2.5 billion per year. Industry experts say we should be operating at $10 billion per year.

Tourism: The Philippines registered $6.3 billion in tourist spending (visitor exports) in 2015. This is expected to reach $6.6 billion in 2016 with 5.5 million international tourists. Each tourist spends an average of $1,200 directly in the Philippines. Thailand, Singapore and Malaysia generate three to five times more tourist arrivals than the Philippines. This is clearly a sector that needs to be aggressively developed. The government can take the lead by continuing the global campaign of “It’s more fun in the Philippines,” which will market this country as a destination. Tourist spending goes directly into the local economy, is inclusive in nature and has a multiplier effect. At 20 million tourists, this industry will rival in size the call-center industry and OFW remittances with $20 billion per year in economic output.

Creative industries: The BPO sector needs to look at developing new value-added areas of the BPO industry. Voice customer service may be automated down the road as voice recognition software and robotics become commercially available. Thus, we need “future proof” outsourcing work. Graphics, animation, game development and other creative work meet this criteria. Animation is a $200 billion-per-year industry. Five percent of this is $10 billion and will create another pillar for the Philippine economy to stand on.

Sub-total: $48.3 billion times a multiplier of 1.4 is $67.62 billion.

Lifting caps on foreign investments in key sectors: Although controversial, lifting the cap of foreign investment in real estate can generate significant foreign direct investments and additional downstream multiplier effects. Vietnam has a good model where foreigners can buy raw land on the condition that it is developed according to plan within a pre-determined time period. If the foreign group fails to implement by the indicated time of approval, there are grounds for cancellation of the ownership on the property. In such case the government can re-bid that same property. Our constitutional restrictions on foreign ownership are outdated. We cannot open the gates overnight, thus a measured and deliberate opening similar to the Vietnam model looks like the right way to go. Assuming we can attract $20 billion in foreign direct investment with a multiplier of 1.5, we add $30 billion for a total of $100 billion in additional GNP.

Machiavelli believed that the end justifies the means. If our next leader were to deliver on this promise, then people should be less critical of the “how.” Results are what matters now and we should keep our eyes on the ball.