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1. GDP change. The PNoy administration with 6.2% GDP growth was the best performer of the seven administrations. Another remarkable fact is that while Indonesia, Vietnam, and Thailand showed a decline in average growth in the period 2011-2016 vs. 2005-2010, the Philippines under PNoy showed increase in growth over the same period. Fantastic performance.2. Inflation rate. The PNoy administration with 2.7% again was the best performer in price stability among the seven administrations. Almost half compared with the previous period, 2005-2010, and similar to the performance of Thailand.3. Government gross debt as percent of GDP. PNoy’s was the second-best performer among the five administrations, next to Duterte’s. But here is the catch: it was 47.6% in 2010 and significantly reduced to only 37.3% in 2016, a 10.3 percentage points reduction in just six years. When the Duterte government came in, it stopped the decline and went on high borrowings, the ratio was flat at 37% from 2017-2019, and back to 47% in 2020.4. Power installed capacity. PNoy expanded it by 8.2 GW in just six years, the biggest rise compared with five previous administrations. In a sense, PNoy corrected the mistake of his mother, President Cory, who killed the Bataan Nuclear Power Plant (620 MW) with no alternative, resulting in large-scale blackouts nationwide in 1991-92.5. Actual power generation. PNoy expanded power generation by 30 TWH in just six years, the biggest increase compared with the previous five administrations. This further proves that energy is development, more electricity is more growth, more poverty reduction.
However, can we always rely on growth rates to determine better economics? Vietnam has already been strong during Doi Moi, it would be reasonable that a slowdown was destined to happen. I'm not going to deny any achievements Noynoy has. The problem is with people is with people who put him on top of the pedestal. It's possible to support Noynoy without treating him like a fairy or a god.
Eco-cha proponent Masigan also wrote this on Business World on Noynoy:
President Aquino understood the importance of foreign direct investments. FDIs are vital for job generation and for capital formation. Trust and confidence were his tools to attract FDIs and this was achieved through good governance.
Good governance has many facets. Not only did it mean the judicious use of resources, it also meant installing the best and brightest technocrats in key positions in government; it meant regular consultations with the academe, socio-civic groups, and business groups in policy formulation; it meant making decision based on data and evidence-based reasoning rather than personal bias, conjecture, or impulse; it meant establishing measurable targets which are regularly evaluated against performance (President Aquino was known to personally review the key result areas of his cabinet against what was delivered); it meant benchmarking deliverables to global standards; and it meant leveraging on technology whenever possible.
President Aquino’s honesty, sincerity, and steadfastness produced exemplary results which was evident as early as the first year. This was enough to convince the international community that the Philippines was indeed a good country to invest in. It also helped that President Aquino, along with his economic team, regularly reached out to strategic foreign enterprises in international road shows. Good governance, rapidly improving fundamentals and an exceptional reputation abroad made investors come in droves. From just $1 billion in 2009, FDIs increased eight-fold to US$8.28 in 2016. Along with FDIs came jobs and export earnings.
It can be effortless to insult me and say, "See, it's just the people! Not the system!" However, Per Se also had this to say revealing what held Noynoy back:
Benigno Aquino III: president, 2010 (July) to present. The FDI flows during Noynoy’s term have been relatively higher. He has brought in so far $4,300.2 billion of FDI flows, the equivalent of $2,150.1 billion average per year. (Note: The dollar weakness also affects the amount of the FDI flows.)
FDI flows are likely to be higher going forward in the Noynoy Aquino presidency. With investment grade rating and continued sound macro fundamentals, the Philippine economic record is likely to be much better.
However, that potential will be capped unless he improves the FDI climate in the country through direct reforms dealing with FDI policies. He appears to be under an illusion that the move to change the restrictive provisions to foreign investments in the Constitution would not make a big difference. Unless his mindset changes on this point, Aquino’s future performance on this account will not be spectacularly much better.
Philippine FDI performance is dismal, relative to neighbors. The country compares poorly, in fact dismally, within the ASEAN region in the matter of FDI inflows. I will show this next week.
Each president has been living through the curse of the “original sin” of Philippine development policy. This has been a legacy of misguided nationalism. It has further been fuelled by self-interest by those who control the nation’s resources who have kept our presidents (whom they support) from doing their proper jobs on this score. That curse is embodied in the restrictive economic provisions of the constitution in the matter of investments in land, in the development and use of natural resources, and in the operation of public utilities.
All presidents have tried to overcome these provisions by introducing special ways and incentives by which foreigners could be encouraged. However, the whole country could not advance well when these critical sectors – especially public utilities – are in the way of improving the critical services required by a good business environment.
In short, Noynoy may have done something but there have been things that held him back. One must ask, "How much can Noynoy (or any president for that matter) do within just six years?" If one reads the political tenure of the late Lee Kuan Yew (who died before Noynoy) and the near-centenarian Mahathir Mohamad, they never achieved strong good governance in just one term! Who can remember the time when Noynoy wanted to build that express from Baclaran to Bacoor but it was near the end of his term? Who can forget some infrastructure projects secured during Noynoy's time and were finished during the term of former president Rodrigo R. Duterte? There was this risk that Duterte may cancel them because he and Noynoy belonged to two different parties. However, we must also take note that Duterte also helped Noynoy's presidential campaign in Davao last 2010! Noynoy's father the late Benigno Simeon "Ninoy" A. Aquino Jr. was also a co-founder of PDP-Laban. Ninoy also spoke the truth that the Marcos Years weren't under a genuine parliamentary system. The late Salvador "Doy" Laurel also challenged the late Ferdinand E. Marcos Sr.'s legitimacy as the nation's leader!
The UP School of Economics is right in saying, "However, that potential will be capped unless he improves the FDI climate in the country through direct reforms dealing with FDI policies." In short, Noynoy is held back by certain policies. In short, the 1987 Constitution of the Philippines is already getting outdated.
It may also be time to look into this detail. It turns out that while Noynoy had some pros, he had some cons too. That's why I remind blind admirers that no politician is a fairy godparent. In fact, Benjamin Diokno, a distant relative of Atty. Jose Manuel "Chel" Tadeo Diokno, writes the following:
For the Aquino administration, underspending has been the norm. It should be spending more for public infrastructure to make up for past neglect and to bridge the Philippines’ huge infrastructure gap. Yet, it has notoriously underspent, resulting in further worsening of the existing decrepit public infrastructure.
Last year, planned spending was P2,284.3 billion while actual spending was P1,981.6 billion, or a difference of P302.7 billion.
It’s a pity that the Aquino administration failed to spend what Congress has already authorized it to spend for public infrastructure and investment in human capital.
Imagine what the unspent P302.7 billion can buy for the government in terms of new roads, bridges, airports, seaports, irrigation facilities, urban transport systems, and others. Higher spending could have pushed the economy on to a higher growth trajectory.
The opportunity cost of underspending is enormous. Imagine how many direct and indirect jobs could have been created with P302.7 billion worth of public infrastructure. Imagine how much of the P302.7 billion could have ended up in the pockets of poor and middle-income people.
Assume 25% labor costs for public construction, then the direct labor costs of P302.7 billion is approximately P75.7 billion. Imagine the multiplier effect of the P75.7 billion in terms of new consumption and investment.
Imagine how many Filipinos would have been pulled out of the poverty pit with the additional P302.7 billion government spending. Poverty rate and hunger incidence would have been cut significantly.
Given the present state of the Philippine economy, government underspending is a sign of failure, not success. And at this time when the credibility of policymakers are at rock bottom, it might be a good idea for the economic managers to admit that government underspending is bad — not good — for the economy and its people.
Admitting that the government has underprovided and underspent at a time when public needs are high might be a hard pill to swallow. But, at least, it could be a refreshing change.
If it's bad to overspend, it's also bad to underspend. It might be comparable to haggling at the cost of health and safety. Why would I eat at a sidewalk eatery that has poor safety standards? Sure, it may cost me more to eat at a food court in the mall. However, eating at a sidewalk eatery with poor safety standards could cause me to land at the hospital. Using cheaper materials because theyr'e cheap would compromise the quality. It would be short-term savings instead of long-term gains. Regardless, Noynoy may have had his successes and his failures. Some of Noynoy's shortcomings may have been prevented under a parliamentary form of government. It's because Noynoy would need to go through rigorous steps as a member of the parliament before he could even sit as prime minister. Noynoy's rise can be attributed to his mother's death from cancer.
No matter how Masigan praised Noynoy and endorsed Leni, he also points out the painful truth. Masigan wrote in Business World this and why he supports economic charter change:
The restrictive provisions of the constitution have held back the country’s development for more than 30 years. From the 1980s up to the close of the century, countries like Singapore, Malaysia, and Thailand leapfrogged economically on the back of a deluge foreign direct investments (FDIs). During that period, the Philippines share of regional FDIs was a paltry 3% in good years and 2% in normal years. The flawed economic laws of the constitution are largely to blame for this. Lately, Vietnam has taken the lion’s share of FDIs, leaving the Philippines in the dust.
See, embedded in the 1987 constitutions is a list of industries in which foreigners are precluded from participation. These industries include agriculture, public utilities, transportation, retail, construction, media, and education, among others. (For those unaware, these industries are collectively known as “the negative list”). Apart from depriving the country of forex investments, technology transfer and job opportunities, the lack of competition from abroad has created monopolies and oligopolies owned by a handful of families. These families earn scandalous profits even though they are inefficient.
Our flawed economic laws are the reason why our agricultural sector has not industrialized and why food security eludes us. It is why our manufacturing sector has not fully developed. It is why we lost the opportunity to be Asia’s entertainment and production capital despite our Americanized culture (Netflix located its Asian headquarters in Singapore, Disney in Malaysia, MTV in Hong Kong, and Paramount Studios in Taiwan). It is why our education standards have remained embarrassingly behind the rest of the world.
The constitution limits foreigners from owning more than 40% equity share in corporations. In addition, foreigners are barred from owning land. These provisions have caused us to lose-out on big-ticket investments which would have made all the difference in job and revenue generation. Not too long ago, we lost a multi-billion dollar investment from a US auto manufacturing company which instead went to Thailand. We lost a multi-billion smartphone plant by Samsung which went to Vietnam. Limiting equity ownership to a minority stake and prohibiting land ownership is a great disincentive for companies investing in large manufacturing plants with a useful life of more than 50 years. Land is used as equity for business financing and to take this away from the business model is enough reason for investors to take their business elsewhere.
Masigan may have praised Noynoy but he still points out some serious flaws. What Noynoy fanatics may not see is that Noynoy's longtime friend Leni was actually open to amending the constitution. Hopefully, Leni and company will see the need to shift to the parliamentary system. The Liberal Party of the Philippines would've been the opposition if we were in a parliamentary system.
MANILA, Philippines — Presidential aspirant and Vice President Leni Robredo said Friday she is open to amending economic provisions in the Constitution to allow for more foreign investments into the country.
“I am very much open to exploring any proposed constitutional amendment that would unlock current roadblocks that are thrown our way as long as we ensure that the process is open, transparent and people are given the opportunity to participate,” Robredo said in a forum on economic reforms.
In short, this is a charter change with a democratic process. I didn't vote for Leni (but I didn't vote for President Ferdinand "Bongbong" R. Marcos Jr. either) but I was glad she's open to amend the constitution. The Constitution is the rulebook of what to do and not what to do. It's the system of the nation. Why do you think operating systems get updates and even get changed? Who in the right mind will still use Windows 10 when it's becoming obsolete? Who in the right mind will still use Windows 95, 98, XP, or any older Windows version when it's 2024? Why do you think these operating systems get updates? Why do you think the 1987 Constitution of the Philippines has Article XVII, which allows for amending the Constitution? Unfortunately, some people treat the 1987 Constitution of the Philippines as some kind of religious text, never mind that not even the late Maria Corazon "Cory" S. Cojuangco-Aquino meant it to be the forever constitution of the Philippines?
True and long-lived constitutions, a wise justice has told me, should be broad enough to be able to meet every exigency we cannot foretell and specific enough to stoutly protect the essentials of a true democracy; in short, open-ended documents that will always be relevant. Remember that constitutional changes are not safe or easy to come by. Our first attempt at constitutional revision was followed by a dictatorship. And this, our second endeavor, was preceded by a revolution.
If there was nothing wrong with the law of the land, why was it even necessary to throw way the 1973 Constitution of the Philippines? Speaking of which, Cory herself should've remained as a national symbol of unity like Halimah Yacob of Singapore. Cory was the national symbol of unity during the EDSA revolution. She should've been president while the late Fidel V. Ramos was the prime minister. The 1987 Constitution of the Philippines should've endorsed a parliamentary government. It would mean that lawmakers from both the government and the opposition will think things wisely before making any critical changes. Unfortunately, the lawmakers are "playing it too safe" at the cost of safety. Even worse, it seems that Noynoy only won because of his mother's death. How many people will keep riding on family names or just because someone in their clan died?
Let's give credit where credit is due. Noynoy deserves credit where credit is due. However, let's not think like businesspeople stuck in their past successes (read here). Do you remember when Nokia used to be a hot big thing? However, Nokia refused to evolve, and guess what happened? One may look cool having a Nokia before not now. Kodak was another problem. Kodak declined to embrace digital photography for some time. Now, Kodak may no longer be as strong as it used to be. To say that we should never update the constitution because of Noynoy is like a business that clings to its past successes. Sure, one can celebrate successes but successes can also blind the successful person, giving room for them to be miserably unsuccessful in the future.
This post isn't meant to discredit Noynoy as a whole. I've pointed out the ups and downs as much as I can. This would be to point out that while Noynoy has his successes--he also had his failures. We need to address the root cause of what held Noynoy back from 2010-2016. Instead, this post is all about seeing what Noynoy could've done better if he undertook econ cha cha, as needed!