It’s laudable that the Philippines is heralded as the second fastest growing economy in 2015 with a growth rate of 5.8 percent, just behind China, despite weak external demand, typhoons and El Niño. This trajectory is expected to continue in 2016 and 2017, for which period the International Monetary Fund (IMF) projects growth rates of 6 percent and 6.2 percent, respectively.
But with the coming elections, feedback from some of my business colleagues and friends in social media who are pro-administration party reveals a palpable nervousness that if another presidential candidate wins, the continuity of the current policies and programs will be disturbed.
On the contrary, regardless of who becomes the next President, the Philippines will continue to grow. This is according to Jaime Augusto Zobel de Ayala, chairman and CEO of Ayala Corporation; and I agree with him and his other points.
“The reason why I believe that is that we’re interlinked globally now. From a standards point of view, from an economic point of view, the world looks at us and we cannot escape and be in isolation from the trends that are taking place. I think, generally, these trends have taken the standards up—(such as in) governance and leadership,” he said during a press briefing after the recent Ayala stockholders’ meeting.
He added, “I guess the trend will take us forward. Leadership can push us faster to that path or slower, but we will move forward.” So the burning questions are—how much faster can our economy grow and which presidential candidate can push our country forward along this path?
Our country can, indeed, grow faster; in fact, grow by a double-digit rate according to IMF economist Takuji Komatsuzaki. Based on his recent report, our country’s real GDP can post 9 to 11 percent growth in 15 years amid a steady improvement in public investment efficiency and assuming half of the inefficiency is eliminated in five years. What if more than half of the inefficiencies in government can be removed in five years? Or in less than five years? The sooner our economy grows by double digits, the faster progress can trickle down to the quarter of the population that is below poverty line.
But how can we accelerate growth? One obvious answer is that the government needs to spend more on public infrastructure to spur growth. The IMF noted persistently low public investment in the Philippines, averaging 2.5 percent of GDP between 2000 and 2014, the lowest among member countries of the Association of Southeast Asian Nations (Asean).
Doubling or tripling the country’s infrastructure spending can have a huge impact on its GDP.
Another is by plugging the leaks in government and in the economic system. One area is by seriously and significantly reducing, if not, totally eliminating corruption and related crimes.
A study by the Global Financial Integrity (GFI) released in December 2015 says that the Philippine economy was cheated of $132.9 billion or more than the P6 trillion in illicit money outflows in the past five decades, including proceeds from crime, corruption and tax evasion, resulting in losses of more than P357 billion incurred yearly on average. This is almost equivalent to 3 percent of the country’s GDP. What’s worse, the Washington DC-based research organization said that these have led to reduced domestic savings, drove the underground economy, and facilitated crime and corruption.
Another area that needs urgent attention is the worsening traffic in the metros. Estimates from experts show that Metro Manila’s notorious traffic jams cost the Philippine economy at least P3 billion ($64 million) a day or close to $1 billion a year. That’s a measly 0.3 percent of our GDP, but the non-economic costs are huge, such as the impact on family life, increasing stress and illnesses.
The final question is—who among the presidential candidates can continue paving the growth path started by the administration, and at the same time decisively address the pressing issues that are limiting the full potential of our country’s growth? I leave this to the electorate to decide.
The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX. The author may be e-mailed at firstname.lastname@example.org or visit his website at www.reylugtu.com.
The author is a senior executive in the information and communications technology sector. He is the Chairman of the ICT Committee of FINEX. He also teaches strategy, management and marketing courses in the MBA Program of the Ramon V. del Rosario College of Business, De La Salle University.