In a workshop held in Davao City last June 20, President Rodrigo Duterte’s economic team revealed his 10-point socio-economic agenda to top businessmen from all over the country. Similar to former President Benigno Aquino’s eight-point agenda, Duterte’s list aims to address various issues that negatively affect the development and growth of the Philippines.
The points focus on three main aspects: reduction of government bureaucracy, infrastructural development, and investment in human capital. In achieving these milestones, the Duterte administration hopes to continue the economic growth experienced under the Aquino administration while ensuring that the benefits trickle down to even the poorest sectors of society.
According to the National Statistical Coordination Board, the Philippines fell below the poverty line with a rate of 25.8 percent of the population in the first semester of 2014. This year, the government is adamant on decreasing the poverty incidence from 25 percent to 18 percent. Duterte’s administration bared the economic agenda of improving social protection programs, such as strengthening the Conditional Cash Transfer (CCT) program to protect the poor from economic shocks and instability.
The CCT program, also known as the Pantawid Pamilyang Pilipino Program (4Ps), is the administration’s anti-poverty program. The government selects the poorest of the poor through a proxy-means test. Nutrition, healthcare, and education are being supplied to children aged 0-18. The program has the twin objectives of providing social assistance and bringing forth social development.
The 4Ps’ “social assistance” objective is done through giving monetary support to tremendously poor families as immediate response to their needs whereas the “social development” objective is done through breaking the intergenerational poverty cycle, such as health check-ups for the maternity and children aged 0-5, and children enrollment in daycare, elementary, and secondary schools, among others. As a means of eradicating poverty, the 4Ps is set to be improved as it is part of one of the administration’s 10-point economic agenda.
A probable solution to unemployment
The Philippines’ second economic problem revolves strongly around high unemployment rate. Standing at 6.4 percent during its latest measurement in April, it was not at all an impressive decrease from last year’s unemployment rate, which stood at 6.5 percent, according to the Philippine Statistics Authority.
A possible bottleneck perceived by many is structural unemployment, which is a mismatch between the required skills of industries and those supplied by the labor force. Workers must have the required skills demanded by their firms or else they will be structurally unemployed.
Structural unemployment causes a high rate of unemployment in the Philippine economy. For one, it requires educational institutions to provide the required skills that an aspiring employee must possess. Otherwise, unemployment would then yield a domino effect: It would mean a decrease in national output and decline in the aggregate demand.
The seventh point in the economic agenda mainly answers this problem through investing in human capital development, including health and education systems, and match skills and training to meet the demand of businesses and the private sector. The right allocation of jobs can reduce the unemployment rate in a relatively steady long-term expansion of the labor force given enough fields of work to satisfy it structurally.
Another beneficial point in decoding unemployment is the eighth point which aims to promote science, technology, and the creative arts to enhance innovation and creative capacity towards self-sustaining, inclusive development. This economic agenda is relevant in increasing the capacity of the labor force and also a major requirement in attaining the country’s macroeconomic goals: the full utilization of all sufficient economic resources including labor.
The 10-point economic agenda also included escalating the annual infrastructure spending to account for 5 percent of the Gross Domestic Product, with Public-Private Partnerships (PPP) playing a key role.
A pertinent observation might have overwhelmed the nation when much of the previous administration’s infrastructure plans went downhill or failed to come to fruition.
In the public sector’s defense, 12 major infrastructures were approved last 2014. As enumerated by the National Economic and Development Authority (NEDA), some of these infrastructure projects include the first phase of the operation and maintenance of airports in Iloilo, Davao, Bacolod, and Puerto Princesa. NEDA also gave the green light to the modernization of the Davao Sasa Port project, the Regional Prison Facilities through PPP, and a change in contract of the much-awaited Laguna Lakeshore Expressway Dike Project, also under the PPP.
In relation to infrastructure growth, Finance Secretary Carlos Dominguez spoke about how “contracts will be respected, good governance will be delivered, and corporate taxes will be lowered.” These plans promise the masses a refinement of infrastructure management to be headed by multi-sectoral agencies and the public sector.
Human capital development
The seventh point in the agenda aims to develop the Philippine population through proper health services, education, and accurate employment.
Recent reports by the World Bank, International Labor Organization, and Department of Labor and Employment (DOLE) have shown that job mismatch has severely affected the economy’s growth. The 2013 Philippine Development Report of the World Bank noted that only ten percent of science graduates end up working in the manufacturing industry while nearly half end up in trade, real estate, or other service subsectors. The Commission on Higher Education’s Graduate Tracer Study reveals that some do not work in their specialized fields because of a lack of jobs or insufficient qualifications.
In order to boost the quality of the labor force, the Aquino administration developed the K-12 educational system. It aims to create a more globally competitive workforce, as well as to equip high school graduates with the necessary skills for the modern day workplace. Newly instated Education Secretary Leonor Briones plans to continue the implementation of the K-12 program, even amid opposition. She also pushes for a stronger implementation of the Alternative Learning System. The non-traditional form of education hopes to provide basic education to all Filipinos, regardless of age, gender, or ethnicity.
Meanwhile, Pulse Asia’s most recent survey on “Most Urgent Personal Concerns” has identified both education and health among the primary concerns of Filipinos. Chronic malnutrition rates in April were the highest it has been in the last ten years.
In 2010, the Aquino administration had set out to provide universal health care to all Filipinos. New Health Secretary Paulyn Jean Rosell Ubial has vowed to focus on completing the program to ensure it covers everyone, most especially the poor. She also plans on strengthening efforts to provide health services to those situated in remote areas.
Urging rural investments
Economists and business analysts have observed the Manila-centric phenomenon over the past few years, which has left the rural sector far behind in boosting its economic growth. Duterte has expressed his intent to eradicate this Manila-centric attitude of the government, in which funds are directed mostly to Metro Manila.
In the first four months of 2016, 30 percent of total approved infrastructure projects of the Board of Investments amounting to P35.04 billion were awarded to the National Capital Region. Duterte aims to boost the country’s rural sector since the urban sector receives most of the country’s infrastructure budget.
An economic boom or doom?
Entrepreneurs and businessmen are generally in favor of the administration’s 10-point socio-economic agenda. Believing that the points point to the solution to Metro Manila congestion and poverty, Manuel Pangilinan, chairman of MVP Group of Companies, backed the agenda’s renewed prospect on agriculture and tourism. Pangilinan also approved of Duterte’s emphasis on the agricultural sector and the promise to balance out economic expansion in both rural and urban areas.
However, a number of analysts have stated how the 10-point socio-economic agenda is a replica of the previous administration’s. In response, the current administration has mitigated the implication of this statement by emphasizing how Duterte’s agenda has strengthened feeble points in the past agenda and paid attention to essential sectors.
In addition, several points in the agenda also failed to specify actions needed to address economic issues. The lack of framework contributes to slow manifestation of projects about to be implemented.
The administration plans to execute this line-up throughout the term. Within the first years of transition to the current leadership, it is a guarantee that these points will be executed in a slow and steady pace. However, there remains a lot of hope in the agenda. With the right people to act on these points, it will indeed result into an economic boom.