It was not lost on Juan Jose Daboub, the El Salvadoran managing director of the World Bank, who issued a dire warning during his visit to Manila last week. "The strength of regional competitiveness sounds an alarm bell that this country cannot afford to ignore. Time wasted, reforms that lapse, large segments of the population with untapped potential, continued tolerance of corrupt practices will have a real price, not just in lost income and lost market share, but in lost opportunity for millions of Filipinos," he told a forum on good governance. Daboub stressed the need to deepen reforms for a more stable business environment, so that the country could gain a larger share of investments coming into Asean, and thus keep pace with its neighbors.
Many of us may find it ironic that even Vietnam has outpaced our country in terms of economic growth and poverty reduction. Not too long ago, the Philippines played host to Vietnam’s refugees, providing them safe haven in Puerto Princesa in the province of Palawan. Sadly, these days, our roles have been reversed. Vietnam now plays host to overseas Filipino workers. It is emerging as the star of Southeast Asia, with economic growth expected to reach close to eight percent this year. As Daboub has pointed out, this is happening in a closed society with no political freedom, but where it took just over a decade to cut poverty in half.
The Philippines, on the other hand, has become a bottom dweller in the Association of Southeast Asian Nations (Asean). While our improving fiscal outlook and broad-based economic growth in the first half have prompted a resurgence in business confidence, our economy remains hobbled by the lack of investments – resulting in 30 percent of Filipinos remaining poor due to joblessness and unstable incomes.
"How can this be, given your country’s well-educated population, lots of entrepreneurial talent, abundant natural resources, vibrant private sector, incredibly active civil society, including a free press and strategic location in one of the world’s fastest growing regions?" Daboub wondered. I’m sure it’s a question that’s been burning in our minds since we missed the boat as a tiger economy during the ’90s.
A recent analysis made by credit rating agency Standard & Poor’s offers an answer. For the first time since the 1997 financial crisis that swept the Asian region, S&P noted that we are now at par with Indonesia in terms of credit risk category (both currently pegged at "BB", or below investment grade) and positive outlook. But Agost Bernard, who did the risk analysis, pointed out that the positive outlook on the Philippines, which is traced to the fiscal turnaround accomplished this year by the Arroyo administration, continues to be weighed down by political volatility. "Policymaking and implementation remain subject to interference and delay by a fragmented legislature in which regional and vested interests hold sway," it was noted. The result has been a gradual but steady decline in investments in the Philippines since 1997, in contrast to the resurgence in Indonesia where political instability is perceived not to be as disruptive despite high-profile terrorism problems.
Imagine that! Even Indonesia’s high-profile terrorism problems are no match to the endless political power struggles we have here in the Philippines. With mid-term elections coming up, the political skirmishes will certainly escalate once more – all done for the sake of Juan dela Cruz, who will continue to live on P50 a day unless our economy starts to expand like our Asian neighbors’. Hardly have we warmed into our newfound economic luster, than another jolt looms in the horizon. Disturbing, if not downright infuriating, isn’t it?
This reminds me of what the Charter Change Advocacy Commission (Ad-com) has been telling us all along: economic prosperity is dependent on long-term political stability, which requires a supporting constitutional and legal structure.
Citing a study that reviewed the political structures of 54 emerging democracies during the ’70s and ’80s, or what are referred to as third-wave democracies, Ad-com noted that the democratic survival rate among pure presidential systems was lower at 20 percent, as against 61 percent among pure parliamentary regimes. Presidential regimes were also more susceptible to military coups than their parliamentary counterparts. Out of the 54 emerging democracies, 21 countries with presidential regimes experienced breakdowns between 1973 and 2004, as against four with parliamentary governments. During the same period, 15 of the emerging democracies came under political crisis – all of which were presidential systems.
Ad-com’s Atty. Romela Bengzon points out that the separation of powers under the presidential/bicameral system fosters intense rivalry and competition for power among the branches of government. The endless power struggles lead to gridlock, preventing governments from moving forward with their programs, she says.
Sounds familiar? Of course. We’ve been witnessing scenes of this nature since 2001.
But, with the fusion of the executive and legislative branches of government under a parliamentary/unicameral system, Ad-com is certain the political gridlock could be done away with, since the endless power struggles would dissipate. As a single unit mandated to create policy and implement it, there would be no need for saber rattling and bickering as accountability is clearly defined in a streamlined organization. Reforms would no longer be held hostage by politicking, as consensus building would be a matter of procedure rather than of choice.
It has also been pointed out that protectionist provisions in the 1987 Constitution also pose a drag on investments. Attorney Bengzon who is in charge of the Ad-com’s economic liberalization agenda, says that by lifting restrictions on foreigners, investments would pour into mining and oil production, roads and ports, electricity and water supply, railways and shipping, specialized schools of higher learning, aircraft and aerospace, movies, media and advertising.
She is not alone in making that observation, by the way. Donald Dee of the Philippine Chamber of Commerce and Industry (PCCI) has warned that no amount of good governance or consistency in economic policies would attract foreign investors if a country’s Constitution discourages them from bringing in capital and new technologies.
Indeed, Bengzon notes that Malaysia, Singapore, South Korea, Taiwan and China all made the leap to economic growth and progress over the years by shifting from their old government system to parliamentary. These countries used to be our peers, I might add, but are now a cut above us.