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Major issues facing Philippine economy

A number of developments during the last 100 days either have begun to cause grave damage to the Philippine economy or threaten to do so.

Government agencies and diehard defenders of the new administration can say whatever they wish on the issue of international confidence in and respect for the Philippines, but inflows of investment, capital, trade and assistance are not enhanced by shows of animosity and disrespect towards international institutions, foreign governments and foreign leaders. It is a mistake to attribute  the emerging signs of international backlash—especially the decline of the Phisix (Philippine Stock Exchange index) and the depreciation of the peso—to international market trends solely. Foreign governments and private investors are highly sensitive to bad governance, administrative irresponsibility and erratic behavior on the part of national leaders.

There is no such thing as an unnecessary or dispensable industry in today’s Philippine economy, where unemployment and underemployment rates remain at naggingly high levels. Certainly not the mining industry, which produces a number of key minerals—including gold, copper, nickel and chromite—and some of whose components have been operating for close to a century.

Considering that today’s Philippine economy needs all the jobs that it can get its hands on, the object of government policy should be the raising of the operating standards—especially the waste disposal practices—of the mining companies, not their suspension or closure. There are two classes of mining operations in this country: responsible mining and irresponsible mining. The authorities should go hammer-and-tongs against the irresponsible mining companies but give all-out support to the responsible ones.

“Regular” employment, with all the attendant social-security and other benefits, is undoubtedly something much to be desired for all employees in this country. But, given that not all—probably the majority of—entrepreneurs can provide such benefits and remain competitive, the choice for such entrepreneurs boils down to (1) not renewing the contracts, at “endo” time, of contractual employees whose renumeration they can no longer afford or (2) violate the new prohibition against the “endo” practice, knowing that DoLE (Department of Labor and Employment) lacks the capability to effectively enforce the prohibition. Would non-renewal of “endo” contracts be good for the economy? Would the non-regular choose non-renewal over continued receipt of income?

In going after businesses like SM and the 7-11 convenience-store chain DoLE clearly is going after the low-lying fruit. But how about the SMEs (small and medium enterprises) that are not so visible and are limited in their capacity to provide employment of any kind? These latter establishments precisely are the ones that the Minimum Wage Act amendment sought to keep alive. Must the high-lying fruit be forced to violate the new DoLE rule?

A hardened Filipino politician of times past is recorded as having uttered the dictum “Politics is addition.” In a paraphrase applicable to today’s highly politicized environment, economic development is addition. Being still a middle-income Third World economy, the Philippines is in no position to reject any unconditionally proferred foreign aid. The Philippine economy needs all the resources—the dollars, the euros, the yuans and the deutschemarks—that come its way. It cannot adopt a “We don’t need your aid” posture. Every bit of aid counts. Certainly, the Filipinos who comprise the 26.7 percent comprising this country’s poor don’t want Malacañang or Congress to tell aid donors to stop giving the Philippines economic assistance.

This country should not strive to be independent. It already is independent: didn’t the Senate vote in 1991 to not renew the Military Bases Agreement and thereby close down the US military bases in this country? What this country should strive, in its policymaking, is real, not phony, independence—the kind of independence that the likes of South Korea, Singapore and Taiwan to the position of international respect and economic prestige that they enjoy today. In getting to where they are those countries’ leaders—the Chiang family, the South Korean generals and Lee Kuan Yew—treated international institutions and foreign leaders with civility and maturity, not insolence and bluster.

To keep its vulnerable economic development process going, the Philippines needs to pursue an independent foreign policy that seeks to make new friendships without straining or ending tried-and-tested ones.

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Topics: Rudy Romero , Major issues facing Philippine economy
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