I beg to contest what President Ferdinand Marcos Jr. said at the inauguration of the Kanegosyo Center, “I saw a report earlier this morning where one of the economists said the grade that I will give for the President is incomplete. I agree with him. We are not done.”
Actually, Mr. President, I call it – a failure to launch.
One year has passed and it is not that you have not taken off. You have not yet begun. Your administration can so far be described as a series of false starts.
Worse, reports of nepotism and cronyism are circulating in the grapevines. People around you, mostly relatives, are being accused of wholesale corruption.
It has been sarcastically suggested that you give your first lady a formal position in government to make her officially accountable for her actions, as allegedly she has been taken hostage by her yellow clique. Synonyms are inner circle, gang, cabal but sounds more like a syndicate because they are allegedly not only engaged in power-tripping and influence oeddling, but criminal transaction, allegedly including smuggling.
Your campaign said “Samasama tayong babangon!” (We rise together!)
But the first thing you abandoned were your loyalists who already had a bad experience following you in the 2016 vice presidential campaign. You marginalized them twice.
The second thing that happened was that you reneged on your campaign promise to those who voted for you. You made them expect that you will pursue the development vision of your father and continue policies President Rodrigo Duterte laid down for the nation notably on the War on Drugs and our foreign policy.
You said your campaign promises are still “a work in progress”.
But your Secretary of Finance is good at nothing but same-old, same old strategies, window dressing our macro-economics.
Your proposed budget for 2024 of P5.8 trillion is a ten percent increase from last year because debt-servicing has also increased. Only 55% of this budget will come from government revenues, but 45% will be sourced through loans from Ben Diokno’s favorite institutions – World Bank and the Asian Development Bank, the seat of liberal economy.
Your Secretary of Budget Management says the ratio of our gross domestic product is only 21% of that budget.
So, the problem of our economy is really in the production of real products, real goods. Our economy has morphed from agriculture to service economy without passing through industrialization.
Back to basics
The Philippines was part of the group of countries that caught up during the post-war import-substitution and industrialization years. It began to deviate from the pack after the 1970s, however, leaving the group in 1982, never to re-enter it. Political instability, institutional weaknesses, liberalization policy, labor migration, and Dutch disease.
(Dutch disease is a short for describing the paradox that Netherlands experienced, which occurs when good news, such as the discovery of large oil reserves, harms a country’s broader economy. It may begin with a large influx of foreign cash to exploit a newfound resource. Symptoms include a rising currency value leading to a drop in exports and a loss of jobs to other countries.)
Taken together, these forces created a “perfect de-industrializing storm”, so how do we bring back the Philippines back to its missed “industrializing” opportunity?
Mr. President, the answer is returning to basics.
Your father, Ferdinand Emmanuel Edralin Marcos Sr., pioneered of the paradigm shift from agriculture to industrialization. He was clear in his goal to establish a New Society or Bagong Lipunan.
In such a society, no longer would Filipinos live in poverty, hunger, corruption, and violence. After centuries of colonial oppression, he said it was time for Filipinos to finally be free to fulfill their potential as human beings.
In what today would be understood as democratic socialism, Marcos did not call it such at that time as it could have been misunderstood in the light of the Cold War prevailing in the world. He disguised it under the term “egalitarian”.
The closest meaning would be that a social philosophy advocating the removal of political inequalities among people, economic socialism or and the decentralization of power to devolve to the citizens the task of nation-building.
Hence, his three roadmaps of political liberation, economic emancipation and social concord, towards achieving a balanced and progressive agro-industrial economy. development.
The agricultural and fisheries component of this was championed through the Green Revolution that enabled the Philippines to be self-sufficient in food.
The twin-formula was to divert the hacienderos of the land and the oligarchs controlling utilities to a wider range of investments in eleven major industries, namely copper smelting, phosphate fertilizer production, aluminum smelting, diesel engine manufacturing and automotive assembly, cement production, pulp and paper manufacturing, heavy engineering industries producing machine tools for large industrial plants, coconut industry diversification, integrated steel milling, alcogas manufacturing, 80% for use by motor vehicles.
Both agro and industrial stimuli were to create limitless employment to a population of about 35 million people. Well, we have since grown into a country of 110 million.
To be able to achieve this vision, that he called “a revolution from the center”, a government-led drastic reforms.
Your father has not only provided for the vision and roadmaps, but has paved the road towards it realization.
What did he use to as engine to grow those eleven industries?
Low electric power. The industrial component was pre-staged by the nationalization of energy to provide low-cost electricity for residential and commercial consumers, and more efficient mobility for transportation.
Energy resources were also diversified from mere fossil fuel to and clean and cheap hydro, geothermal and finally nuclear. Had Cory Aquino not mothballed the Bataan Nuclear Plant, the Philippines would have reduced its reliance on imported fuel to only 14%.
Travel all you want Bongbong, if the cost of operating a business in the Philippine remains where it’s at, just for electricity alone, nobody will come burn their money just to pay for high electric bills.
In a study by Majah-Leah V. Ravago, a masteral student at Ateneo Department of Economics, as of 2021 electricity prices in the Philippines remain among the highest in Southeast Asia, along with Singapore (Figure 1). In December 2021, the Philippines’ residential rate was $0.16/kWh, second to Singapore ($0.18/kWh) and higher than Thailand ($0.10/kWh), Indonesia ($0.10/kWh), and Malaysia ($0.05/kWh).
But how come Singapore, and for that matter Japan and New Zealand, manage its high-power costs, and we cannot?
While Singapore and the Philippines are the two countries with deregulated electricity industries, the per-capita GDP of Singapore in 2021 was the highest at USD 66,176 (constant 2015 US$ prices), while the Philippines’ is extremely low at USD 3,413. Every Filipino’s share of its GDP is only 5% of that of Singapore.
In terms of productivity, Singapore’s per-capita electricity consumption in 2019 was 9.50 MWh, while that of the Philippines was 0.90 MWh the lowest in the region. the lowest in the region.
For the Philippines, electricity rates are for 101-200 kWh consumers and are computed by averaging the monthly rates for 2020. A residential customer with 200 kWh a month in Meralco’s franchise area had a monthly bill of about $36 or malapit na sa P2,000 a month. This household would typically have only a refrigerator, electric fan, flat iron, TV set, and radio.
What has happened is that the money is just circulating among your rich friends but not among the majority of the population.
When the big companies, especially those in the utilities and transport sectors posted profits in the tens of billions, they account for most of the money in circulation, spending for their high-end wants, in turn fanning inflation that bloats the prices of commodities at the level of the masses.
Ben Diokno’s claim, that for your first six months in office the growth rate posted over 7%, is illusory, I would not wonder his nose has exceeded Pinocchio’s.
And when our professionals and now even ordinary housewives cannot find jobs locally, they become overseas Filipino workers. Sure, our OFWs had become a great boon to our economy, especially our foreign reserves, but they have also bred the weakening of our family system, and those that developed depression among them contribute to the illegal drug market.
Solution
The solution is unmaking the stranglehold of privatization and deregulation in our economy. With out real goods we cannot dramatically improve our gross domestic product because we will always have less exports than imports. Since the 70s, we got stuck with liberal economy that makes it easier for us to import goods rather than produce them ourselves, and borrow money for the difference.
Producing them ourselves means industrialization, and to spawn industrialization, we begin by lowering power costs.
But early in your administration, you have already made mistakes.
You appointed clones of your best friend Sabin Aboitiz as secretary of energy (Raphael Lotilla) and chairman of the Energy Regulatory Board (Monaliza Dimalanta). So, what structural reforms are you anticipating in the power sector?
In 2019 or before the pandemic erupted, Aboitiz Power booked about P17. 3 billion in net profit. In 2021, P20.8 billion. Last year, Aboitiz Power Corp. raked with record-high P27.5 billion in net income, up by 32 percent.
Given these astronomical profits, can you expect Aboitiz to bat for low power rates?
But you did not stop there. On your seventh month in office, you even gave him a P20 billion behest loan from the Land Bank of the Philippines which services the agricultural and agrarian economy, when Aboitiz already has his own Unionbank.
Malampaya
To make matters worse, you granted another crony, Enrique Razon, a 15-year extension to the Malampaya Service Contract, that was expiring next year.
If Ben Diokno’s warning about a fiscal collapse is to be believed, why are you instead shortchanging the government with revenue opportunities?
If you intended the privatization to continue, you could have called for new bidding on the project that could have generated up to P20 billion in joining fees.
Or you could have tasked the Philippine National Oil Corporation to take over the project where the government stand to earn P100 million a month, or P36 billion a year.
These are just two of your indiscretions, and the faux pas is substantial. mis
Incomplete grade, Mr. President?
These two false starts on your first year already merit that you be dropped from the subject. But should you decide to pursue a passing grade, an introspection as to what national interest is, may be in order.
As Heneral Antonio Luna were to say: Bayan o sarili? (The country or your self-interests?)
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