This week, I had the pleasure and honor of going to Canberra to give a talk at the 2024 Philippines Update, organized and hosted by the Australian National University’s Philippines Institute. The last Philippines Update was done in 2018, making this event extra special. (You can watch both days of the proceedings here and here.)
Specifically, I gave a talk about the state of the Philippine economy before an audience of Australian academics and Australia-based Filipinos. In a nutshell, I said that there’s a growing disconnect between the Philippines’ economic problems (slow growth, high prices, the education crisis, etc.) and the priorities of the administration of President Ferdinand Marcos Jr.
Rather than meaningfully solve these problems, Marcos has prioritized, among others, the rehabilitation of his family’s name (as manifested in the active revival of old programs and policies of his father, the late dictator Ferdinand E. Marcos).
At the same time, Marcos has roamed the world and wooed investors, but to no avail, because the government refuses to solve fundamental constraints to investments like the difficulty of doing business, inadequate infrastructure, and widespread corruption.
Finally, I also pointed out that there’s increasing concern about the blatant misallocation of public funds, as exemplified by the establishment of the Maharlika Investment Fund in 2023 (despite the lack of surplus funds) and the ballooning of unprogrammed appropriations (linked to the scandalous remittance of PhilHealth funds to the Treasury).
I would say that my talking points are a good start if you want to understand the state of the Philippine economy. But I learned tons of insights from my fellow presenters in the ANU event, and I wish to share some of these with you.
First is the deep interconnection between our problems, which I should probably highlight more in future talks. I pointed out the Philippines’ 90% learning poverty rate, and Dr. Fermin Adriano, former agriculture secretary and also a speaker, said that this may have something to do with widespread stunting and malnutrition, in turn related to high food inflation. How can we expect children to learn in school if they’re hungry? And how can we reduce hunger if food prices are rising too fast?
Dr. Adriano added that agriculture today is sadly permeated by “state-sponsored cartels,” and was not so optimistic that food prices could go down unless these cartels are dismantled.
Second, in her talk, Professor Emerita Ma. Socorro Gochoco-Bautista, my colleague at the University of the Philippines School of Economics, drew attention to the need for the Marcos government to pursue urgent investments in, say, health and climate change. For instance, data show clearly we’re not investing nearly enough on maternal care and early childhood development — which could also be a reason for rampant stunting among children and poor educational performance.
Dr. Adriano and Prof. Bautista also debunked the notion that for our economy to grow fast, we need only leave markets be: in fact, the government has a key role in pushing for key investments (e.g., in research and development) that the private sector, by itself, doesn’t have incentives to pursue. They also pushed back against a prevailing notion that Philippine economic policies are “neoliberal” by nature: in fact, sectors in the Philippines are deeply protected. Such protectionism promotes a culture of rent-seeking (or wasteful privilege-seeking), and this can hardly be associated with the term neoliberalism.
In another session, other friends talked about the changing nature of oligarchy in the Philippines. Dr. Marianne Juco-Gonzales, my friend who’s now an economist at the Bangko Sentral ng Pilipinas, discussed parts of her dissertation about the extent of firms in the Philippines with ties to politicians. She shared that back in 2017, more than a fifth of firms were connected to incumbent politicians, while more than half were connected to past and present incumbents. Of course, many things have changed since 2017, but this is the first time that such a quantification has been made.
There was also a striking discussion about just how much big businesses have infiltrated the halls of Congress. For instance, many lawmakers now are closely tied to construction companies and contractors wishing to hog projects bid out by the government.
The extent of regulatory capture in the Philippines is also much worse than you think. At least twice, I also heard a quote which goes like, “Don’t make your regulator your friend, but make your friend a regulator.” For instance, Alfonso Cusi, who worked a long time for the Aboitizes’ shipping business, became the secretary of the Department of Energy just as Aboitiz was diversifying into energy.
Undersecretary Joseph Capuno of the National Economic and Development Authority (NEDA), a professor at UPSE on secondment, also talked in the Philippines Update. He shared never-before-seen data on infrastructure projects being built by the administration, underscoring a not-so-new point: there are plenty of systemic constraints in infrastructure development in the Philippines, from right-of-way issues to pesky procurement barriers. What this means is that accelerating infrastructure development needs more pressure and reforms in and out of NEDA; NEDA, by itself, can only do so much.
Finally, at the very beginning of the Philippines Update, Professor Carmel Abao of the Ateneo de Manila University’s Political Science Department characterized the Marcos administration as possibly “reformist,” a move away from the “populist” Duterte regime.
However, we should be careful about calling the present Marcos Jr. administration “reformist.” In fact, nothing important is happening by way of economic and social reforms, and things are arguably regressing on the economic front — Marcos and people around him are milking various sectors of the economy, as well as government financial institutions, to serve their political interests.
Judging Marcos by his words and actions, he is emphatically not a reformist. And the regressive developments under his administration are proving to be a major drag on Philippine progress.
All in all, the ANU’s Philippines Update provided a comprehensive overview of the myriad economic, social, and political problems of the Philippines. Marites Vitug, Rappler’s editor-at-large, gave the keynote speech on Day 1, about her latest book.
On the sidelines, Marites asked me if I could discuss in my talk any “silver lining” from the increasingly dire picture that was being painted from the discussions. I hated to disappoint Marites, but I couldn’t think of any such silver lining. And from where I sat, no clear silver lining emerged from all two days of the discussions. – Rappler.com
JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan) and Usapang Econ Podcast.