Much still has to be done to sustain growth

ON DISTANT SHORE
By Val G. Abelgas

(Credit: travelerparadise.blogspot.com)

There is no doubt that the Philippines has achieved phenomenal economic growth in the past year that even Gloria Macapagal Arroyo had to acknowledge that her successor and former economics student, President Benigno S. Aquino III, had done well in guiding the country to a 6.6 percent growth in 2012.

Arroyo, who has become Aquino’s arch enemy, reminded the people, however, that she had done better during her term when she added that Aquino “is on track (to) restoring the growth of 7.9 percent where it was before the first half of 2010.”

Nonetheless, the 6.6 percent growth is something to crow about. The International Monetary Fund believes so, and has, in fact, raised its forecast for the Philippines from 4.8 percent to 6 percent this year, which we can still consider to be too conservative considering that the country has already surpassed that target for 2012.

The IMF cited the “resilience and strength of domestic demand” and the “strong pockets of growth” with the business-process outsourcing sector in its forecast upgrade. It added that based on its analysis, things were looking very positive for the Philippines, and that it was confident that the growth targets could be attained, given the momentum that the country has had.

But just a few days after getting all the accolades from the IMF, Arroyo and other economic experts, Malacanang was brought back to earth by its own economic planning chief, National Economic Development Authority Director General Arsenio Balisacan, who told congressmen that despite the robust economic expansion last year, the rising inequality between the rich and the poor remains a problem.

Balisacan was reacting to a report made by the Social Watch Philippines and the Philippine Rural Reconstruction Movement, in coordination with the United Nations, which stated that the country’s poverty situation was worse than in 2000 when it started the Millennium Development Goals that the UN designed to eliminate poverty.

Former national treasurer Leonor Briones of Social Watch said the President has been doing things right, overall, in his first three years but has failed to do the right things that matter most to sustain his gains. The SWP-PRRM report said Aquino’s premier poverty alleviation program, the Conditional Cash Transfer (CCT), has not brought down the index of poverty.

The SWP-PRRM report stressed that “growth benefited a few and excluded so many, thereby widening the rich-poor gap even more.”

PRRM president Isagani Serrano, for his part, said that “while it would seem that President Aquino, in his first three years, has been doing things right to correct the ‘evils’ of the past and improve public service, Mr. Aquino has yet to make a real dent on existing power structures that brought the country to its current poverty and inequality situation in the first place.”

Obviously, despite the repeated pronouncements by the Aquino administration that it has done much to curb corruption, many experts still believe that although some improvements have been achieved, the entrenched corruption and injustices that have blocked progress for decades remain in place. Smuggling and tax evasion, for example, remain a problem.

Definitely, Aquino still has to address the problem of poverty because economic growth would be meaningless unless it trickles down to the people. And for it to be an inclusive growth and to benefit the greater number of people, it needs to address the issue of unemployment and underemployment.

Apparently, the robust growth failed to generate the jobs because it was fueled mostly by the continued increase in remittance from overseas workers and the increased consumer spending generated by these remittances.

The need to address the country’s unemployment and underemployment problems was raised last Monday by Motoo Konishi, World Bank’s country director, during the Philippine Development Forum in Davao.

“The need for good jobs—jobs that raise real wages or bring people out of poverty—is an overwhelming challenge,” he said.

Konishi said there are 10 million Filipinos who are either unemployed or underemployed and another 1.1 million enter the labor force every year. He said the domestic job market in the formal, services and manufacturing industries and employment opportunities abroad were not enough to absorb a lot of people getting into the labor force. He said all other sectors in the economy, particularly agribusiness and agriculture, must contribute more significantly to address joblessness and reduce poverty.

Many economic experts agree with Konishi that the country should develop industries that could generate more jobs, such as manufacturing, tourism, information technology, agribusiness and mining.

Tourism and agriculture are two industries that could generate employment in the rural areas, thereby spreading the benefits of economic growth. The tourism sector is on its way to becoming a major player in economic development with a substantial increase in tourist arrivals this year and the rapid development of tourist resorts and hotels in various parts of the country.

Agriculture has yet to be given the proper incentives to reach its potential, but with Aquino boasting that the country will soon become a rice-exporting country for the first time in decades, that should be a good sign that the administration is ready to give priority attention to the lagging agricultural sector.

Hopefully, with the increased confidence of foreign investors and Aquino’s continuous sales pitch to the world’s major companies, more hard money will come in to boost the manufacturing and information technology sectors.

The country cannot rely on the volatile overseas jobs market and the outsourcing industry to sustain economic growth. It must start focusing on sectors that could generate jobs that are greater in number, more stable, widely spread in the rural areas, and keep its talented and skilled workers in the country. And it must pursue more relentlessly its efforts to crush all vestiges of corruption and injustice in the country.

(valabelgas@aol.com)