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Duterte’s first 50 days and oldest business group

I would give the Duterte administration a rating of 6 out of 10 for its first 50 days in office.

It gets a passing score in my book for the following reasons: First, its 10-point economic plan hits the mark on multiple fronts. Done right, it can put the economy on the fast track of growth; Second, the Department of Finance is clearly working on overdrive to carry-out fiscal reforms at the soonest possible time, primary of which is the rationalization of income and corporate taxes; third, I applaud the passage of the Executive Order on Freedom of Information; fourth, moves towards social reform are decisive and immediate what with the purging of tax evaders, political power players and inequitable oligarchs; finally, the war against illegal drugs and criminality is clearly gaining traction.

That said, I give it an underwhelming score for the following reasons: The first is the diplomatic tussles the President has gotten us into. The President fails to realize that his off the cuff, sarcastic and what he deems as “funny” public statements have a cost attached to it – it erodes the country’s reputation abroad and his own political equity. He seems to think that the public can decipher what is true or what is said in jest. Perhaps fellow Filipinos can tell the difference, but certainly, the international community cannot. To them, words uttered by a head of state are taken at face value and understood to be the official position of the nation. So far, we have found ourselves in a diplomatic pickle with our greatest allies including Mexico, Australia, the United States and even the United Nations.

President Rodrigo Duterte (2016.mb.com.ph)

President Rodrigo Duterte
(2016.mb.com.ph)

It would do well for the President to act and speak in a more presidential manner. He is the face of the nation, after all. He still represents 102 million Filipinos, all of whom want to be looked upon with respect, not disdain, and desire peaceful diplomatic relations with the rest of the world.

While he may think his actions are harmless, it actually erodes his political capital needlessly. There are many more problems whose solutions require political equity. Wasting it on sound bites is reckless, not to mention detrimental to his presidency.

Another reason for the underwhelming score is that the executive branch isn’t working on all cylinders. While the Department of Finance, NEDA and the Department of Environment and Natural Resources are all pulling their own weight, the Departments of Transportation of Communications (DOTC), Agriculture (DA) and Tourism (DOT) are not.

In his first week in office, DOTC Secretary Arthur Tuglade announced a package of stop gap measures to relieve Metro Manila from its traffic woes. This includes allowing the public to utilize major arteries in private subdivisions, banning provincial buses from traversing EDSA, clamping down on colorum buses, imposing stricter enforcement of traffic rules, increasing the capacity of MRT 3 and resolving the MRT-LRT common station debacle, among others. To date, not one reform has been rolled-out and our suffering continues.

Agriculture and agro-industries are crucial components of President Duterte’s countryside development plan. However, we have not heard a peep from Agriculture Secretary Manny Piñol. In fact, when agriculture output fell by two percent in the second quarter this year, the only explanation offered by the Agriculture Department was that it was caused by the El Niño phenomenon. No contingency plan was offered, let alone a long-term development plan.

In tourism, apart from hosting Miss Universe, we don’t know where the department is heading, not even the targets for the next six years.

The Duterte administration must know that while the business sector is supportive of its mission, there is a deadline to the honeymoon period. We hope that all cylinders beginning running by the end of the first 100 days and that important lessons from the first 50 are taken to heart.

The country’s oldest business group

For years, I’ve taken pride in being a member of the country’s oldest business group, the Spanish Chamber of Commerce, an organization established in 1899. I had no idea that the Chamber of Commerce of the Philippine Islands (CCPI) was actually founded twelve years before it.

CCPI traces its roots in 1880’s when Queen Maria Cristina decreed that all Spanish colonies organize their own chambers of commerce. This was one of her last official acts before passing away in 1885. Two years later, the Chamber of Commerce of Manila was established.

The beginning of the 19th century were turbulent times for the Philippines as it transitioned from being part of the Spanish empire to an American colony. Hence, the Chamber of Commerce of Manila laid dormant for more than a decade. It was reborn in 1915 with a new name – the Chamber of Commerce of the Philippine Islands. Throughout the 19th century, the CCPI championed the cause of the Filipino merchant.

In 1978, President Marcos called for the merging of the CCPI and the Philippine Chamber of Industries. The result was the creation of the Philippine Chamber of Commerce and Industry, an organization that endures today.

In 2012, the Chamber of Commerce of the Philippine Islands was revived as an independent unit. It operates as a legacy organization duly recognized by the Philippine Historical Society. Last week, I met with its President, Jose Luis Yulo, Chairman Emeritus, Ramon Pedrosa and board member Benigno Ricafort who told me all about CPPI’s new thrusts.

CCPI is unique in that its members are corporations 25 years or older. It counts companies like Destileria Limtuaco, Elizalde Holdings and San Miguel Corp. among its members. They are a group of formidable companies who have stood the test of time and have witnessed the highs and lows of the Philippine economy. It is precisely their memory of what Philippines once was that drives their mission today.

At the heart of its mission is to re-establish the Philippines as the leading economy in ASEAN. They note how the Philippines had the highest per capita income in the region in the ’60s. Unfortunately, Singapore, Malaysia, Thailand and Indonesia have surpassed us in terms of individual household wealth today. CCPI aspires to have the Philippines restore its pole position by the year 2030.

It believes that seven percent GDP growth will no longer suffice. Given how far we’ve been left behind in per capita income, the economy must expand by double digits for the next 15 years to equalize income levels. The idea is to match China’s 10-15 percent growth rate in the ’90s.

CCPI’s mission is noble, albeit an ambitious one. They argue that rapid growth can be sustained on the back of five developmental pillars.

CCPI’s five pillars

The first pillar is education. CCPI believes that government must channel more resources towards breeding a new generation of Filipinos with greater aptitudes in the sciences. The CCPI further recommends that implicative thinking be honed among the youth and that each student become fluent in English and Tagalog, plus one more language. And because we are a civilized society, the youth must be indoctrinated with a strong sense of decency, integrity and patriotism.

The second pillar has to do with government. Primarily, CCPI calls for recruiting the best, brightest and most honest into public service by offering more attractive salaries compared to their private sector counterparts. The Singaporean model can be used as a benchmark. Inept political appointees must be rejected by all.

The CCPI also supports responsible mining on the proviso that mining rights be awarded to companies who establish factories that convert raw materials into high-value finished goods. Miners who simply export raw minerals must be outlawed.

The third pillar relates to infrastructure and the environment. They support government’s plan to accelerate infrastructure spending to five to seven percent of GDP.

The fourth pillar is contentious as it has to do with foreign equity ownership. CCPI contends that companies who are market leaders and those critical to the economy (e.g. public utilities) must be majority owned by Filipinos. Unfortunately, I am not on board with this. History shows that the absence of foreign competition makes local firms inefficient. PLDT, Meralco and Philippine Airlines circa 1970s and 1980s are supreme examples of inefficiency at the expense of the Filipino people. I think there is no room for protectionism in this day and age of globalization, except when it relates to natural resources. Even if some sectors argue that laissez faire has failed to achieve inclusive prosperity, I still think that in the end, foreign competition will make Filipino companies more enduring. That said, the CCPI maintains its position on majority Filipino ownership.

CCPI’s fifth pillar is to make the Philippine self-sufficient in food through the development of the agro-industrial sector.

The CCPI wants to have their voice heard by both the public and our policy makers. Its members are willing to work as an ally to government towards pushing nation building initiatives, particularly those that relate to its five pillars. Government will be remiss not to tap on this valuable resource.

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Andrew is an economist, political analyst, and businessman. He is a 20-year veteran in the hospitality and tourism industry. For comments and reactions, e-mail andrew_rs6@yahoo.com. More of his business updates are available via his Facebook page (Andrew J. Masigan). Follow Andrew on Twitter @aj_masigan.