THE healthy competition between “frenemies” Manuel V. Pangilinan (MVP) and Ramon S. Ang (RSA) has taken part of the slack in government spending that partly caused the Philippines’s economic growth to decline in the third quarter. This competition, which is an occasional point of interest in the media, was what actually saved the day for the huge decline in the government’s pursuit of infrastructure projects.
The National Economic and Development Authority (Neda) reported recently that government spending in July-to-September period went into negative territory, from 19.21 percent to -6.2 percent. In short, without the healthy competition among business players, including the MVP and RSA groups, the country’s growth numbers would have been much lower. And to think that, for the last six quarters, the growth rate stood at above 6 percent.
What is disheartening to note in the government’s infrastructure figures is that the decline in government spending was not due to lack of cash, but to bureaucratic delays in approving the release of funds earmarked for infrastructure projects.
“Most of the delays were due to lags in the submission of documentary requirements by the concerned agencies,” Neda Director General Arsenio M. Balisacan explained.
His explanation shows the need for the government to really push infrastructure projects forward, as it is a necessary component of pump-priming. It also shows that the government needs to review its procedures for the easy way of releasing funds that have been earmarked for the various projects that are meant to boost the country’s growth.
It is a good thing that the MVP and RSA groups have shown their enthusiasm to pursue many government-infrastructure activities, including public-private partnership projects. For instance, the North Luzon Expressway-South Luzon Expressway connector roads provide the kind of healthy competition that the two frenemies have resorted to. These two connector roads have common roadway berths before they go their separate ways.
By opening an avenue for goods from Region 5 (Bicol) and from even as far as Mindanao that will be sold in northern Luzon and vice versa, the engines of business would continue to hum and ensure growth, even in the countryside. This is what the government should aspire for, given the need of imperial Manila to be relieved of the congestion of business enterprises. To see to it that this thrust of the government succeeds, the delays that marked the big decline in government infrastructure spending should be properly addressed.
It is not enough that the government identifies the key hurdles to its successful pursuit of infrastructure projects. It should ensure that whatever caused the delays in government spending should not happen again. The failure of the government on this key aspect, such as the lack of documents for the implementation of projects, should not be repeated in the next quarter and beyond.
While the government can always turn to private-sector players, such as MVP and RSA, to take up the slack in government spending due to red tape, it would still do well for the government to really take to heart why the proposed infrastructure spending did not happen. Imagine the government’s resources being wasted because of something simple like failing to submit the required documents. As a result, the funds were “sterilized” and did not cause the much-needed bump in growth.
After all, the reason for the lack of inclusive growth is the low economic growth. For the poor to really benefit from the growth, gross domestic product should be 9 percent or 10 percent, at least. That could have been achieved for the first time in the third quarter if the government was not hamstrung by the absence of the needed documents. Truly, red tape—one instance of which is the fact that it would take more than 20 signatures to have power-plant project clear administrative requirements—is what bedevils the country’s march to attaining a higher growth rate.
Somehow, the Philippines is on the cusp of a new growth phenomenon, headlined by the bullish prospects for the business-process outsourcing (BPO) industry. Private-sector developers have, in fact, projected BPO revenues to reach $48 billion by 2020. This is the reason for the acceleration in private construction, which grew by 15.7 percent in the third quarter, compared with only 1.6 percent last year.
Private-sector developers have remained bullish due to strong BPO take-ups. Many of the property giants are building up their office inventory for the expected growth in this area. Some have even set up provincial BPO hubs and populated them with employees who used to work in Metro Manila. This has resulted in increases in the provinces’ income. One added advantage of this is that BPO employees can absorb pay cuts, since they are within the municipality.
So the government should be acutely aware of the problems that caused growth to slow down in the third quarter. While government agencies are at it, they should let healthy competition thrive in order to take out the sting of economic bummers, such as Supertyphoon Yolanda (international code name Haiyan), which not only fell 30 million coconut trees, but also caused the agricultural, fisheries and forestry sector to record a huge -2.7-percent drop.
E-mail: hugagni@yahoo.com.