The meeting between the incoming administration’s economic managers and the country’s businessmen this week is a brilliant strategic move to start the administration at a high note. This approach is similar to the highly consultative process implemented during the Ramos administration in the 1990s. It looks like this will be the first among the many possible consultative meetings across sectors and industries.
What is interesting is that the new administration is still two weeks away from formally assuming their portfolio, but they are already working ahead. This move has undoubtedly propped the local stock-market index, which hit a 13th month high on account of three consecutive days of increases above 1 percent and strongly supported by foreign buying.
Are we in for a much better economy in the next six years? It would be interesting to look at the 10-point agenda of the incoming government and the specific 10-point proposals of the business sector. In general, the 10-point agenda is a statement of continuity and finding ways to build better. There is no doubt that the Aquino administration has helped bring the economy into a higher growth path. The economy experienced the lowest inflation and lowest interest-rate environment in decades. This is validated by the investment grade accorded to the country by the different rating agencies. The investment grade is a big challenge to the incoming government. They are pressured not only to sustain it, but to surpass it in the coming years. Related to this, the plan to increase the expenditures on infrastructure to 5 percent of GDP actually requires the government to set aside about one-third of its budget for this. Coupled with the expected lowering of tax rates, the natural implication of these strategies is that the government will most likely be increasing deficit spending. This will be a good time to do that, especially as the investment grade ensures that international borrowing rates will be lower and affordable. Meanwhile, the focus on rural areas is a response to the weak trickle down effect of the current growth process. This is a good approach to being intentional in making inclusivity work. The continuation of the Conditional Cash Transfer (CCT) and current education policies, and thrust in science and technology ensure that investment in human capital will remain key priorities in the next six years.
The business sector is equally upbeat with its set of proposals to sustain the growth. Among the notable suggestion is the national ID system. This is an efficiency-enhancing measure that have been suggested from the time of then-President Fidel V. Ramos. Undoubtedly, this can help facilitate many of the government processes, including issuance of basic identifications and the doing away of too many independent government IDs. This is also useful in targeting mechanisms for government programs, such as the CCT and senior citizens’ benefits, among others.
The concerns on streamlining the business processes and permits will require that local governments will have to step up in the mold of Davao City. The national government, through the Department of Trade and Industry (DTI) and the National Competitiveness Council (NCC), has been working on improving the cost of doing business and a lot of processes have already been standardized.
However, a lot of local government units still are not fully compliant in many of these. Other proposals are focused on infrastructure improvement, particularly at the rural areas and agriculture and support on industry development, among others. What may be missing from the business-sector side is the level of investment commitment that they are willing to commit to make rural development happen. Their proposals are mostly strategies rather than focus on specific areas. The current DTI and Board of Investments (BOI) have already worked hard with specific industries on road maps. There is no need to reinvent these road maps and they just need to be implemented and supported by the business groups.
Other key proposals, such as continuity of contracts, removal of bottlenecks, comprehensive tax reform and removal of congressional franchises for telecoms, have already been addressed by the incoming economic team as part of their reform agenda. What may have figured prominently in the meeting was the announcement of incoming Transportation Secretary Arthur P. Tugade of the need for emergency powers to address the traffic problem in Metro Manila. It would be good to look also beyond National Capital Region as traffic has been the regular fare in many urban areas around the country. The proposal of the business sector on improving transport infrastructure is also related to this. This is critical, because one of the frustration that the citizens have continually been experiencing is traffic and by putting this on top of the immediate agenda shows how willing this government is in responding to the needs of the people. This can assure people that the new administration is bent not just on building, but certainly in making their lives better, and we hope that this is sustained and made better in the next six years.