Is the Philippine economy moving forward or backward?

The answer is both. The economy is moving forward - and also backward - according to Arangkada 2013, the second assessment report on the Joint Foreign Chambers’ self-proclaimed jump-up strategy on how to move the Philippines forward.

Arangkada is the game plan designed by the Joint Foreign Chambers of the Philippines revealed in 2010. It listed 470 recommendations and seven big winners or sectors of the economy to easily ramp up revenues, employment and the country’s growth.

The economy grew by 6.6 percent in 2012—the best non-election performance in more than two decades.

However, the economy grew by just 3.9 percent in 2011, after having expanded by a hefty 7.6 percent average in 2010—by 8.65 percent in January to June 2010, the last six months of the Arroyo administration, and by 6.7 percent in July to December, the first six months of the Aquino administration.

Adding 6.6 percent and 3.9 percent to get an annual average for two years yields 5.25 percent—modest but not very good, considering that the economy must expand by at least 7.0 percent a year for an extended period to make a dent on unemployment and poverty.

Compared with the robust quarterly growth rates of 2010 averaging 7.6 percent, the 5.25 percent average of the past two years is, in fact, a slowdown.

Among the Arangkada 471 recommendations, those that moved ahead—that is, those deemed as “started,” saw “substantial progress,” or “completed”—comprised 65 percent of the total in this year’s assessment. That is better than last year’s 51 percent.

But much remains to be desired. Only two percent of the 2010 recommendations have been completed, and only 16 percent—less than one out of five—have seen substantial progress in implementation.

Those marked as “started” comprised the largest group (44 percent).

Though positive news, the 44 percent fails to evoke wild enthusiasm because two years is too long to just simply start acting on a problem.

Sadly, over a third of the recommendations have seen no movement, or worse, even saw backward movement or regression. These failures cover constraints to economic growth: overall competitiveness; specific economic sectors like agribusiness, business process outsourcing (BPO), creative industries, tourism, various types of infrastructure, and others; general business environment; environment and natural disasters; governance; labor; security and social services.

The best improvement was in the area of environment and natural disasters (with 14 recommendations), where implementation of recommendations rose from 64 percent in 2011 to 100 percent in 2012.

Major improvement was also seen in social services (25 recommendations in all), particularly in education (12 recommendations), where active recommendations rose from 42 to 83 percent.

Local governance (15 recommendations) also saw substantial improvement, with active recommendations jumping from 40 to 87 percent.

Good progress was also seen in the eight recommendations for pursuing higher economic growth, improving from 50 percent to 75 percent implementation.

A setback is slow progress on infrastructure where dormant recommendations rose from 33 percent to 47 percent for airports, and 53 percent to 71 percent for power.

Significant backtracking was noted on judicial reforms and legislation.

Among recommendations deemed completed are:

(1) keep lump sum budgets to a minimum, having been a major source of corruption in the past;

(2) create reasonable timetables to address the long registration period of build-operate-transfer projects; and, (3) focus the national government budget on the core road network. Substantial progress was noted on: 

(1) Double funds for growth-promoting expenditures through less waste in government spending, more effective tax collection and selective tax increases;

(2) strengthen the BPO sector with a robust legal framework;

(3) commit the government to work with private industry for a clear overall policy in support of the manufacturing sector; and

(4) constant quality improvement of teachers and school curriculums.

The JFC hopes to see progress on these slackening areas: 

(1) create a roadmap for the National Renewable Energy Board, 

(2) reduce and rationalize congressional pork barrel, 

(3) rationalize holidays in view of the Philippines’ having the highest number of paid holidays in Southeast Asia, 

(4) channel remittances into productive investments, and 

(5) decongest Metro Manila by shifting international container shipment volume from Manila to Batangas and Subic ports.

Among the biggest failures— fighting smuggling.

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