IBON Foundation | #114 Timog Ave. Quezon City | 9276986 | www.ibon.org
On the Duterte
administration’s economic direction in its first 100 days
Neoliberal economics continues, but nationalist change
still possible
IBON FEATURES -
There is still much to be done for the
Duterte administration to overcome the Philippine government's stubborn
adherence to old and discredited anti-Filipino neoliberalism.
This overrides and is
inconsistent with Pres. Rodrigo Duterte’s otherwise pro-poor and pro-Filipino
pronouncements. This is also notwithstanding the
welcome appointment of activists and progressives to important cabinet and
other positions on agrarian reform, social welfare and development, labor and
employment, anti-poverty, and the environment.
In particular, the 10-point economic agenda of
the economic team still upholds the failed notion that creating the most
profitable market conditions for big business, especially big foreign investors, is the best
strategy for economic development. This is certainly the best strategy to increase
foreign corporate and oligarch profits but it does not and can never deliver
socioeconomic development for the poor majority.
The recent experience under
the old Aquino administration underscores this. The rapid economic growth
greatly increased the wealth and profits of a few -- but the historic crisis of
joblessness worsened, covering unemployment and deteriorating quality of work,
and tens of millions remain in crushing poverty. Agriculture and fisheries weakened
while genuinely Filipino industry continued to decline.
The continued
neglect of national industrialization is especially glaring. The economic team wrongly
equates "made in the Philippines" by foreign investors as
industrialization even if what is really needed is "made by
Filipinos" or by Filipino industrial firms. The government's industrial
policy is, at best, for foreign manufacturers and their subcontractors to set
up shop in the Philippines so that the country's cheap labor and raw materials
keep getting exploited by foreign industrial powers.
Nothing in the
economic team's official thrusts support pro-Filipino industrialization. Yet
Filipino industries producing using the country's rich natural and human
resources are necessary for the majority of Filipinos to truly benefit from these
resources.
A few developments in the first 100 days do create the potential for the
needed shift in economic strategy -- the progress of peace talks with the
National Democratic Front of the Philippines (NDFP) and pronouncements that the
government will adopt a more independent foreign policy. It is still early and
the Duterte administration treats these as largely political matters but taking
them to their logical socioeconomic conclusions will yield vast benefits for
the economy and the Filipino people. They can be crucial elements for
reorienting national economic
policy towards the new, progressive, and long-term national industrialization
policy that is so vital for the country's development. They deserve the
people's full support and enthusiasm.
Positive: Pro-Filipino
stance
1. The continued progress in peace negotiations between the
government and the NDFP
is an important high-level process of the Duterte government for addressing the
nation’s economic woes. The second round of the talks take up the crucial peace
agenda of socioeconomic reforms with the comprehensive agreement on social and
economic reforms (CASER) already described as their "center of
gravity". This is because the CASER tackles the country's underdevelopment
which creates the conditions for armed conflict. Concluding a substantial peace
deal creates the possibility of a seismic shift from destructive neoliberal economics
to nationalist and pro-people economic policy.
2. The president’s recent pronouncements of adopting
an independent foreign policy, including his criticisms of the US, can be the start of a real shift in
foreign policy where the country navigates regional and global geopolitics as a
sovereign nation rather than a vassal state of the US. The president has criticized the US for its interference in the
Philippines, military exercises in Mindanao, and even the violent colonization
of the Philippines and subjugation of the Moro population. He has also
threatened to stop implementation of the Enhanced Defense Cooperation Agreement
(EDCA) and expel US military forces. On the other hand, he has expressed
interest in closer ties with China and Russia. This includes bilateral talks
and greater diplomacy with China on disputes in the South China Sea/West
Philippine Sea in contrast to the previous administration’s US-driven
militarist approach. This patriotism on geopolitical matters can and should be
extended to the economy with greater economic nationalism.
Negative:
Neoliberal agenda
1.
Nothing in the economic team's official thrusts
support pro-Filipino industrialization. The People's Agenda listed a few initial and very doable proposals for
promoting national industrialization for national development but none have
been adopted in any form. Indeed, the undue importance that is still given to
attracting foreign investment and to further opening up the economy even
undermines potentially positive statements such as about building the steel
industry as the backbone of industrialization.
2.
Economic strategy is still geared to attracting
foreign investors to set up their low value-added enclave firms or to
subordinate Filipino small- and medium enterprises (SMEs) to their global value
chains. This does not put the
country on the road to eventually being able to produce Filipino products from
our rich natural and human resources. Such a strategy on the contrary ensures
that the country's mineral and agricultural resources and our vast skilled
labor force will still be exploited by foreign firms or otherwise still benefit
foreign economies.
3.
The administration continues to negotiate unequal
free trade agreements (FTA). The
on-going talks for the Regional Comprehensive Economic Partnership (RCEP) and
European Union-Philippines (EU-PH) FTA follow a template of liberalization in
trade, investment, and the rest of the economy. These prematurely expose the
economy to competition with advanced industrial powers, drastically restrict
the country's space for national development policies, and will stifle Philippine
development. The economic team is even aggressively seeking to join the
US-dominated Transpacific Partnership (TPP) agreement despite this deal already
facing rough sailing within the US as well as with some other countries
involved. This surrender of economic sovereignty is a major contradiction to
the president’s declared stance of an independent foreign policy.
4.
The economic team is biased for big business and
other elite interests. There have
not been any moves for meaningful wage hikes or to truly end
contractualization, both of which are vigorously opposed by employers. The
moratorium on land conversion so needed by farmers and proposed by the
secretary for agrarian reform is being publicly contradicted by the
government's economic managers to favor real estate, agribusiness and tourism interests
in rural areas.
5.
The economic team continues to favor public
private partnerships (PPPs). This means
that public funds will continue to subsidize private profits from
infrastructure projects. The public will bear the higher taxes needed for this
as well as higher fees on utilities and services. More and more urban and rural
resources and spaces will be turned over to oligarch profit-making rather than
primarily used for the benefit of the people.
6.
The Department of Finance (DOF)
is proposing to lower taxes on the rich while increasing those paid by the poor.
The country's
biggest corporations and wealthiest families will benefit from the neoliberal
tax thrust of lower income taxes, estate taxes, donor and transaction taxes on
land, and capital income taxes. The revenue loss will be offset by charging the
poor higher prices on goods and services with value-added tax (VAT) being charged on
previously exempt items, higher excise taxes on petroleum products, and a new
sweets tax.
Challenges
The Duterte administration is still just in its first few months and its
economic strategies are not necessarily already firmly established. It can
still claim the development high ground with even just a few significant policy
measures:
1.
Declare national industrialization the major
strategy for Philippine development. The Duterte administration should immediately reorient national
economic policy towards a new, progressive, and long-term national
industrialization policy.
2.
Launch a nationwide "Buy Filipino, Build
Filipino" campaign for Filipino producers and consumers to work together
in building a pro-Filipino economy. This can be done immediately as a very easy but symbolically
significant first step. Filipino manufacturers should correspondingly be given
immediate relief by stopping corruption in the Bureau of Product Standards (BPS),
Food and Drug Administration (FDA), and Bureau of Customs (BOC) that results in
smuggling of cheap imports, by removing incentives giving undue advantage to
foreign manufacturers, and by genuinely giving priority to Filipino-made
products in government procurement.
3.
Institutionalize priority measures to promote
national industrialization. This can
start with the creation of a
multi-sectoral National Industrialization Council involving the government,
Filipino industrialists, micro and SMEs (MSMEs), labour unions, people's
organizations, academe, and other civil society groups. Other measures include
creating and implementing a National
Industrialization Financing Program, an MSMEs
for National Industrialization Program, a Filipino Industrial Science & Technology Strategy, and creating
a Department for Industry and Commerce.
4.
Assert the country's economic sovereignty. This can be done by renegotiating or withdrawing
from international economic deals that damage the national economy and that
prevent the Philippines from using protectionist policies that the developed
countries themselves used and even continue to use.
5.
Explore economic relations outside of its
accustomed US-, Japan- and Western Europe-centric circles. The Duterte administration can pursue new
arrangements for development finance, technical assistance and infrastructure
projects with the Asian Infrastructure Investment Bank (AIIB) and New
Development Bank (NDB). It can explore deeper bilateral relations with China,
Venezuela or Iran for infrastructure, iron and steel, oil and renewable energy
ventures, with Cuba for medical research and biotechnology projects, with
Norway for energy, metals and shipbuilding projects, with Sweden for
telecommunications, iron steel, and automobile projects, and others.
6.
Unilaterally withdraw from the so-called
Partnership for Growth (PFG) with the US. This sends an unequivocal signal that the country is adopting
independent foreign economic policy. The US$739 million
(Php33 billion) PfG is an intrusive US mechanism for directing Philippine
economic policy. This US program seeks to shape the country's economic policy
and institutional environment to become more open and profitable to US
investors and corporations. These mean terms one-sidedly beneficial to foreign
capital and against sustainable Filipino economic development. The PFG is the
most comprehensive US intervention in economic policy-making today and is
explicit in pointing out the Constitution as among the major hindrances to foreign,
including American, investment.
7.
Take the lead to build or join a regional or
global united front against the biggest and most aggressive advanced capitalist
powers. Pres. Duterte is
expressing anti-foreign intervention sentiments that are likely shared by many
other countries in Southeast Asia and the rest of the world that have long been
chafing under the interference of the traditional big foreign powers. Yet the
rise of the BRICS as alternatives to the traditional economic powers creates
new opportunities in the global economy despite the protracted economic
stagnation. A new national development strategy can take advantage of this.
-IBON FEATURES
No comments:
Post a Comment