QUEZON CITY - A recent study by the Ateneo School of Government showed that economic recovery from the recession brought by the coronavirus (COVID-19) pandemic is possible if the Duterte administration will immediately address their shortcomings in their economic policies and reforms.
In the third part of the Duterte at 5: The Duterte Administration By The Numbers, the report on the country’s economic policies noted that the government should focus on strengthening fiscal spending, ensuring that policies accommodate small and medium enterprises, reviewing tax reforms, and reassessing the national infrastructure program.
Citing past economic reports, Economics Professor and author of the recent paper Dr. Philip Arnold Tuaño said that implementing these measures “will be a difficult task that the administration would be facing towards its final year.”
“At the start of its term, the Duterte administration reaped the benefits of the Philippines’ momentum of economic growth and poverty reduction; the country’s GDP continued to expand at above six percent during the 2016 to 2019 period while poverty incidence significantly declined to 16 percent in 2018,” Tuaño explained.
“However, the COVID-19 pandemic shock in 2020 has dented this trajectory and impaired the short-run prospects of the country; at the same time, the lack of a robust fiscal response to the social and economic impacts of the pandemic may have further diminished the ability of the country to immediately continue its pre-pandemic growth trajectory,” he said.
The report showed that the decline began when the Duterte administration failed to sustain the momentum of the country’s economic growth before the coronavirus pandemic hit. “In terms of GDP growth, Vietnam overtook the country in 2018 and the country’s growth had tapered off to just under six percent,” it read.
While the unemployment and underemployment rates continued to decline during pre-pandemic times, Tuano wrote that inflation rates steadily rose from 2016 to 2018 due to successive oil price increases, supply problems due to typhoons, and the peso depreciation.
Build, Build, Build project did not build on its promises
Despite promising a “Golden Age of Infrastructure” through its Build, Build, Build (BBB) program, only eleven of the 75 flagship projects were underway during the first half of President Duterte’s administration in 2019. This prompted the administration to modify the list of BBB projects by dropping big and unattainable projects for smaller and more feasible ones.
“The BBB program has been plagued by perennial problems such as right-of-way acquisition, the technical deficit in government agencies, political lobbying, and issues in bidding and contracting,” Tuaño explained in an interview with the Ateneo School of Government.
“Mukhang hindi nakapag-handa ang ating pamahalaan para implementahin ang dami ng mga proyektong ito. Mapapansin natin iyan sa mababang tinatawag na disbursement rates ng mga pondo. Malaki ang binibigay na pondo ng gobyerno sa mga proyektong ito pero ang ginagastos lang ng mga ahensya tulad ng Department of Public Works and Highways at saka Department of Transportation ay kalahati lang ng target,” he added.
He also pointed out that issues also hounded the developmental assistance or loans the Philippines planned to get from China amid the territorial dispute in the West Philippine Sea.
“Maraming mga pagsusuri na nagsasabi na ang isang issue nga ay mas mataas ang interes na ipinapataw ng pamahalaan ng China. Kung tumataas nga ang interes ng mga proyektong ito, tataas din iyong halaga ng ating utang sa kanila,” Tuaño said.
“Therefore, compared to other donors, like for example the multilateral corporations, even Japan, which actually provides lower interest cost loans, parang hindi ‘ata pabor sa ating gobyerno iyong mga ito [utang sa China],” he added.
Meanwhile, Tuano noted that while the passage of tax reform measures was relatively successful in raising government revenue, it may have disproportionately hurt the poor.
“Nagkaroon kami ng pag-aaral noong 2019 para lang suriin iyong tinatawag nilang TRAIN 1. Ang sumatotal na epekto nito, bagama't nakatulong ito sa pinakamayaman na sampung porsyento ng mamamayan, hindi naman ito masyadong nakatulong sa pinakamahirap na pamilya ng ating bansa,” the economics professor said.
“We have seen a deduction in personal income tax, iyong binabayad na buwis ng ordinaryong mamamayan pero nakikita naman natin, tumaas ang buwis na ibinabayad naman sa ibang mga klase ng kagamitan at serbisyo,” Tuaño argued.
Global pandemic furthered setbacks on PH economy
Due to the onset of the coronavirus pandemic, the Philippines contracted the worst economic growth among Southeast Asian countries and recorded its lowest Gross Domestic Product in the post-war economic period.
“In 2020, while most Southeast Asian countries managed the severe reduction in economic activity by keeping GDP growth down to less than negative 6 percent, the Philippines contracted the worst in terms of economic output,” Tuaño said.
“Services in 2020 mainly bore the brunt of the decline in output including accommodation and food service, transportation and storage, real estate and education.”
“Maraming mga empleyado at manggagawa sa mga sektor na ito ang nawalan ng sahod kaya bumagsak ang demand ng mga produkto at serbisyo. Dahil dito ay bumagsak itong ating ekonomiya. Maraming mga tao ang nawalan ng trabaho,” he further explained.
While the Bayanihan laws, particularly financial aid, helped address the needs of those affected by the pandemic, Tuaño stressed the need for a more comprehensive strategy in addressing the pandemic.
“Parang napaka-one-off [ng response ng gobyerno] - iyong hindi sustained, iyong hindi pangmatagalan itong tulong na ito. Ang tingin kong nangyayari, mukhang ang gobyerno nakadepende talaga siya sa quarantine o yung lockdown at saka sa assistance,” he pointed out.
“I think that can only be addressed if the government has a more comprehensive strategy against the pandemic. Malinaw na iyong ating investments sa testing at contact tracing ay hindi pa talaga nagagawa. Kaya ang nangyayari, namimili iyong ating pamahalaan kung kailangan ba nating palakasin ang ekonomiya o kailangan nating pagtuunan ng pansin ang kalusugan ng mga tao,” Tuaño explained.
Focus on human development, programs for new normal
The report also added that human development should be the basis of economic development.
“Public policy should take into cognition that there are more distinct socio-economic categories than just those who are poor and non-poor and take into consideration the importance of ensuring that households move above the welfare ladder. Thus, protecting against downward mobility and ensuring the upward mobility of the different socioeconomic groups is important,” the report read.
Moreover, the report also recommended measures to prepare the economy for the new normal such as strengthening the internet backbone, improving the transportation system, supporting local value chains of production, addressing climate vulnerabilities, and ensuring sustainability.
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