A YEAR into the Marcos Jr. administration, local economists are looking for concrete projects and programs that would address the country’s food security issues, especially with inflation remaining elevated and the impending El Niño.
University of the Philippines School of Economics (UPSE) Associate Professor Karl Robert L. Jandoc said he is eager to hear about the President’s plans for agriculture since prices remain elevated.
Jandoc also worries over a possible reversal of the Retail Trade Liberalization (RTL) law, particularly in allowing the National Food Authority (NFA) to intervene. The law is the only reason why rice prices have not been a significant cause for higher inflation.
“If the President assures that he will [retain] the RTL, that he won’t touch it, that might temper an increase in prices [especially in the context of] a shortfall in the December harvest,” Jandoc told the BusinessMirror in an interview.
Jandoc said a shortfall in the December harvest of rice is possible especially in the context of the El Niño. The government’s weather bureau earlier estimated that the full impact of the drought could be felt sometime in the last quarter of the year.
Should this reduce the country’s production of rice, the water-loving food staple of the Philippines, and the production shortfall is compounded by the spike in consumer spending typical of the Christmas season, Jandoc said the inflation targets of the Bangko Sentral ng Pilipinas (BSP) may not be met.
The BSP earlier said the country’s inflation rate could fall within target toward the end of the year. Inflation in June already reached 5.4 percent, only 1.4 percentage points away from the high end of the 2 to 4 percent target of the government.
The concern, Jandoc said, also includes the reduction in the rice farmer’s incomes due to El Niño. Given the government’s “cloud of fiscal consolidation,” he said it may be difficult for the government to “pick up the slack” in their incomes, similar to previous bouts of reduced farm output.
UP Professor emeritus Epictetus Patalinghug told this newspaper that the government should address the structural problems in agriculture particularly low productivity, low farmer incomes, lack of rural infrastructure, and the existence of cartels in onions, garlic, vegetables and essential food crops.
Patalinghug said the government should also address “regulatory rent seeking by BFAR, BPI, BAI, and SRA” by reducing barriers before giving private firms the authority to import fish, vegetables, meat, and sugar.
“I like to hear the President outline his projects and programs for the next five years and his accomplishments in his first year. Particularly, the plans to contain inflation, food prices, energy prices, health access, education access, housing access, and job generation programs,” Patalinghug said.
Before addressing these reforms, Freedom from Debt Coalition President Rene E. Ofreneo thinks the President must recognize that the agriculture sector “is in shambles” due to “bad economic policies” such as the “World Bank’s ‘agricultural deregulation’ program.”
Ofreneo said this agriculture deregulation program gave rise to “untrammelled profit taking by big importers, big distributors, big hoarders, big traders and big smugglers” who took advantage of the so-called free-market rules.”
He added that agrarian reform is still vital, such as what remains to be done in terms of the Land-Acquisition-Distribution (LAD) in private lands and land tenurial issues in government lands, especially in forest lands and military reservations.
Ofreneo said many Agrarian Reform Beneficiaries (ARBs) have also abandoned farmers, selling their lands after the 10-year restrictive rule in the 1990s to 2000s.
“What PBBM is now gradually doing in the agri sector shows that his government cannot afford to take a hands-off role in the market. Otherwise, food inflation and social unrest will be difficult to tame,” Ofreneo said.
Meanwhile, Ateneo de Manila University (ADMU) economist Leonardo A. Lanzona is concerned about how the coming El Niño and the government’s fiscal constraints could worsen the employment situation.
Lanzona said the government should exert more effort to eliminate corruption, which reduces competitiveness and productivity.
Ofreneo said employment is crucial given that a study by the UP School of Labor and Industrial Relations (SOLAIR) found that 80 to 82 percent of workers in the Philippines are considered informal workers who had “limited protection, social and legal” if at all.
Given this, Lanzona said greater attention must also be paid to jobs lost or affected by automation and digitalization through a “massive skill program.”
“I would like to hear an admission that the government failed to take decisive action on inflation and unemployment. Unfortunately, we will probably hear that inflation and unemployment have finally declined,” Lanzona said.
“The truth is that low inflation does not mean that prices have gone down. Also, easing unemployment does not mean greater access to quality jobs,” he added.
Crucial to addressing the jobs challenge, Ofreneo said, is the need to strengthen the manufacturing sector. Unfortunately, the manufacturing sector could not grow because of the country’s power constraints.
This underscores why efforts to reduce energy costs and meet the targets set in the Philippine Development Plan (PDP) on energy need to be met, according to Ateneo de Manila University’s Majah Leah Ravago.
Ravago stressed that it is not enough that the government focuses on generation. There is a need to accelerate the development of transmission capacity to bring down energy costs.
“Accelerate development of transmission capacity. Fast-track the implementation of permitting reforms and right-of-way: EVOSS and Ease-of-doing business should be operationalized to realize its true intent. Digitization of systems and processes and not just making it online,” Ravago said.
Meanwhile, UPSE Head of Research Renato E. Reside Jr. said the President should also focus on the next set of tax reforms. These include passive income taxation, excise on plastics, and land taxes, among others.
These will be crucial in addressing the country’s financial needs in the next few years, as well as efforts to undertake reforms in the country’s pension and retirement system.
Patalinghug added that along with this, fiscal reforms must include efforts to allow the Department of Budget and Management (DBM) as well as the Commission on Audit (COA) to “discipline” national government line agencies who are not spending their budgets efficiently.
“The President should pursue pension reform in the military and uniformed personnel. He should lay down his anti poverty programs and social safety nets for the weak and the poor for the remaining 5 years of his term,”
Patalinghug added that beyond fiscal, monetary, and banking policy reforms, the national government needs to use the Maharlika Investment Fund to finance essential infrastructure projects.
He added that some foreign lenders and the private sector players may not be willing to undertake projects. Patalinghug said some of these projects are the Tutuban to Sorsogon Railway, Matnog, Sorsogon to Samar Bridge, and Leyte to Surigao Bridge.
Patalinghug also cited the Panay Railway Project, Manila to Tuguegarao Railway, and the Mindanao Railway Project among the infrastructure projects that could boost economic growth, including certain sectors such as tourism.
For De La Salle University economist Maria Ella Oplas and University of the Philippines Los Baños (UPLB) College of Economics and Management Department of Economics Assistant Professor Luisito C. Abueg, the tourism sector needs more than a change in tagline and logo.
Oplas and Abueg said the national government should continue to support or invest in the tourism sector. They stressed that the government must also resolve the issue of fund mismanagement in the Department of Tourism (DOT).
