AFTER the myth that President Benigno Aquino 3rd’s reforms supposedly kickstarted the economy’s growth surge, the new dubious line media and analysts are bandying about is that the country’s resurgence may stall once his administration ends.
Both story lines are wrong, though they have held sway among investors, experts, and journalists who should know better. And constantly these reform myths, while helping the Aquino’s camp’s push to stay in power beyond next June, wrongly worries and discourages business.
In truth, there is no reason to worry about the economy after Aquino’s departure.
Let’s go over some oft-ignored facts. First, the current economic momentum has been building for 17 years since 1999 — over a decade before the present administration started in mid-2010 — the longest uninterrupted period of annual increase in Philippine gross domestic product in at least half a century.
GDP has kept growing since the end of the 1997-98 Asian Crisis, despite the second People Power uprising and the 9/11 terrorist attacks in 2001, the 2001-03 economic slump in the West, wars in Afghanistan and Iraq, the SARS pandemic, skyrocketing oil and food prices in 2007-08, political unrest under then President Gloria Arroyo, and megastorms almost yearly over the past decade.
Even in the depths of the 2008-09 world financial debacle, when most major economies shrank, the Philippines was among a handful that kept growing, boosted by dollar earnings from overseas Filipino workers (OFWs) and business process outsourcing (BPO), as well as countercyclical public spending prodded by weekly or fortnightly Arroyo Cabinet meetings.
Having weathered all that, is the growth momentum going to stall just because Aquino steps down? Really now.
Growth drivers remain after 2016
Consider this: crucial factors fueling growth aren’t suddenly going to vanish. Certainly not the fiscal measures enacted in 2005, implemented since 2006, and cited by credit rating agencies for the Philippines’ sovereign debt upgrades.
Sound macroeconomic policy under independent Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., appointed in 2005 and reappointed in 2011, will continue at least until 2017, when his second six-year term at the BSP’s helm ends.
And reforms lifting ease of doing business and world competitiveness rankings, done under the Anti-Red Tape Act and the National Competitiveness Council (ARTA and NCC have been around since 2007) need not be reversed.
Some $50 billion a year in OFW and BPO earnings support consumer spending and property development, the top expansion drivers under Aquino. That largely recession-proof flood of cash won’t disappear after he leaves Malacañang.
Neither will the vast infrastructure built in the past decade and a half, especially the Nautical Highway network of roll-on-roll-off ports, which trebled domestic tourism and inter-island trade, and more than 60,000 km in roadworks, both new construction and maintenance, since 2001, as claimed by the Department of Public Works and Highways (48,585 km up to 2009, and about 14,000 since).
Add to that reported DPWH achievement some 30,000 km of farm-to-market roads opening up new agricultural areas — most of the FMRs under the 2004-10 Medium Term Philippine Development Plan (MTPDP). Even discounting these possibly inflated figures by half or more, the actual tarmac laid remains after Aquino.
On chronic electricity shortages, the Department of Energy announced in January a total of 5,198.4 megawatts of new generating projects nationwide committed by investors till 2020. If built, the facilities could more than match the projected 3,300 MW capacity needed in the next five years under the DOE’s 2009-2030 power development plan. Given the huge political and economic cost of brownouts, any future government will work hard to ensure that the announced projects happen.
To be sure, much more needs to be done on infrastructure. From 2 percent of GDP in the past decade, public works spending declined to 1.4 percent in 2011, as state construction halved in the first semester. In succeeding years, government outlays contributed less than 1 percent of annual GDP growth, and in 2015 it fell short of budgeted amounts by about 1.4 percent of GDP in the first quarter.
The next administration could lift spending with more diligent presidential monitoring and prodding, and none of the illegal funds juggling under the Disbursement Acceleration Program (DAP), which affected P157 billion in outlays. There are also P1 trillion in public-private partnership undertakings finally approved for bidding after years of delay. All that would hopefully help achieve the ambitious infrastructure spending target of 4-6 percent of GDP in coming years.
What about corruption?
Perhaps the biggest worry over the next president is corruption, especially with the dominant Liberal Party’s unrelenting campaign to publicize graft allegations against Vice-President Jejomar Binay, until recently the leading presidential hopeful in voter preference surveys.
However, corruption in the next regime is more likely to decline. For one thing, sleaze under Aquino’s watch has actually reached record levels, from which it is more likely to drop rather than rise further.
Smuggling leapt five-fold to $19 billion a year, from $3 billion average in the previous decade, based on International Monetary Fund trade data, with unheard-of revenue losses of P200 billion, by Aquino’s own count.
Pork barrel, now illegal, trebled since 2011 to more than P20 billion a year, while the P157-billion DAP is the largest amount of malversation ever in Philippine and perhaps Asian history.
Among other dubious transactions, anomalies in military aircraft procurement (P26 billion, cited by state auditors), license plates (P15 billion, bid out even with no budget allocation), and the Metro Rail Transit (alleged bribe solicitation of $30 million) dwarf anything in the past.
It’s hard to imagine how a future leader can top all that and not stir widespread outrage. Especially with press and public more vigilant against sleaze, as noted by respected economist Bernardo Villegas.
So don’t worry about Aquino’s exit. The economy was already on a growth path well before him, and it should stay on that course after him.