Poverty and inequality: Duterte’s woes 

Zoilo ‘Bingo’ Dejaresco IIIGrowth under President Gloria Macapagal-Arroyo averaged only 4 percent, net of a galloping population growth of 2 percent. Per-capita income growth was a miniscule. Poverty levels remained high.

Former President Benigno S. Aquino III’s team did much better, with growth averaging 6 percent, the second best in Asia. The economic pie had grown alongside improved sovereign risk ratings although the equitable distribution of the nation’s wealth didn’t happen.  At the end of his term, three of 10 Filipinos still languish below the poverty line.

Poverty and inequality is now the two-headed monster the economic team under President Duterte has to wrestle with. Fortunately, Team Duterte Economics is a good one.

Finance Secretary Carlos G. Dominguez III had been immersed in private businesses (microeconomics) and is balanced by Dr. Ernesto M. Pernia’s macroeconomic savvy (National Economic and Development Authority director general) with his exposure as senior economist at the Asian Development Bank.

Their combined strength is bundled together in the nation’s budget, which translates the goals into brass tacks economics by funneling scant national resources to where they will yield the best socioeconomic returns for a poor, grossly imbalanced structure between the haves and the have-nots. There, we have an experienced budget manager in Benjamin E. Diokno.

The 46-percent Philippine inequality index is higher than the Asean’s 42 percent. On the other hand, the poverty index is highest in the Philippines at 26 percent compared to the Asean: Thailand (11 percent, Vietnam (8.4 percent) and Malaysia a low (1 percent).

Pernia said the target is to reduce poverty by 1 percent to 1.5 percent per year, so that at the end of six years under President Duterte, this should be at around 16 percent.

Is there regional inequality, as well? Figures show Metro Manilans account for 37 percent of GDP and the progressive Calabarzon (including Metro Manila) is 75 percent of GDP. One can almost sense where the highest incidence of poverty is located.

The per capita of the average Metro Manilan is twice that of the national average and 13 times more than that of the Autonomous Region in Muslim Mindanao folks, the nation’s poorest region and the most politically volatile.

Team Duterte pointed out the Philippines is both a consumption-driven and service-driven economy from the demand and supply equation points of view. Like many less developed countries, the consumption-driven orientation should aim for an investment-driven growth and from service to manufacturing and agricultural bias to create more jobs and boost per-capita income.

It goes without saying the answers would include regionally dispersed growth from redirected fiscal and economic policies and attract more foreign direct investments. It is clear that the quadrupling of per-capita income the past five years of the Aquino administration was inadequate, the regime having started from a very low base.

The 4 million new jobs created by the Aquino administration obviously fell short since a million new job entrants seek employment each year.

There are basic issues to tackle to attract more investments. Peace and order (acknowledged by the President himself); liberalizing foreign ownership of certain industries; subsidizing excessively high power costs in the country; reducing corporate tax from 32 percent to a more Asean competitive rate of 25 percent; and the proposed splitting of the Department of Environment and Natural Resources into environment and natural resource spheres.

One must note the Philippines is among the top 5 resource-blessed countries in the world, and its development requires huge chunks of capital not normally found in a third-world economy like ours. Fiscal strength can be further enhanced with strong revenue collection engendered through reforms from such known citadels of corruption, like the Bureau of Internal Revenue and the Bureau of Customs (BOC). Team Duterte has estimated the daily revenue loss at the BOC alone is a frightening P300 million a day.

Inequality can be addressed through more progressive taxation, expanding the Conditional Cash-Transfer Program in terms of people covered and benefits passed; regional dispersal of government spending in infrastructure and livelihood generation; redevelopment of the blue economy (which is 70 percent of the nation’s resources and geography); and the injection of developmental funds to the slackening agricultural sector.

At 25-percent individual tax and 12-percent value-added tax, the Filipino worker is overtaxed at an effective tax rate of 37 percent. Finally, there are the existing political dynasties, monopolies, oligopolies and duopolies that have, for many years, siphoned off wealth and opportunities to only a narrow few to the prejudice of the many. These disruptive entities should be broken up.

The road to real inclusive growth is long and winding indeed. Those who fail to plan, plan to fail. Time to roll down our collective sleeves and wrestle down poverty and inequality.


Bingo Dejaresco III is a former banker, a financial consultant, media practitioner and a political strategist. Though a life member of Finex, his views here are personal and do not necessarily reflect those of Finex. dejarescobingo@yahoo.com.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Article

SM Prime’s P10-billion retail bond gets strong demand

Next Article

‘PHL economy’s future bright under Duterte’

Related Posts

Column box-Genesis Kelly S. Lontoc-RFP
Read more

Revisiting Pag-IBIG MP2

ACHIEVING a higher level of saving propensity can immensely benefit a developing country like the Philippines. Many of those who save place their money in bank accounts. Still, one particular saving alternative that has grown in popularity through the years is the “Pag-IBIG MP2,” or the “Modified Pag-IBIG II (Pag-IBIG MP2) Savings Program.”