Friday, January 2, 2015

The Philippine political-economic situation in 2015

Recovery is the buzz word today. I'm talking about the recent successes made by the improved performance of the United States and European economies. Many economists foresee a more improved US and European economies by 2015.

This is welcome news for those who have great trade interests in these markets. More improved economy bodes well for exporters. Same goes with importers. This is also welcome news for those working abroad, since the value of their monies will greatly improve, or suffice to say, will be more competitive.

How about here in the Philippines? Will we sustain the growth we have achieved since 2010?

It depends. Firstly, are we ready towards ASEAN integration? Second, is our political institutions or to be very specific, our bureaucracy ready for more investments? And thirdly, is our social institutions also prepared for the impact of integration?

Remember that economic integration has caused mixed successes in certain areas of the world. In the Americas, integration has benefitted small states since they trade with bigger ones and their institutions can cushion the effects of vigorous trade.

In Europe, integration led to the strengthening of several economies yet what analysts observed is the disintegration of several economies which failed to implement policies that protect them from increased trade.

The reality is this---investments will only come in if the environment is "palatable" to the tastes of those investing. What do I mean?

An environment where (1) there is a sizeable and substantive market big enough for those investments (2) a stable political environment (3) a fully oiled, well functioning bureaucracy, (4) a friendly policy-making government and (5) a fully integrative infrastructure system.

In these five requirements, we can be assured of providing only one--a big market. Our 100 million population is not a bane--it is a boon. The more people, the more consumers. Instead of viewing our rising population as a curse, let's think of it as a blessing for us.

The only ones worried about our rising numbers are government and the academe. With increasing numbers means more risks especially in food security. Rising population also demands a great deal in terms of government services--the more people, the more adaptive government must be.

The thing about us is that we haven't resolved this problem as yet. Our political environment is still in an infantile disorder mode. We are entering a stage of self-induced destabilisation. What do I mean?

This year we will see if our experimental solution about the Mindanao Question is highly feasible. This early, many see problematic signs there. There are reportedly many unconstitutional provisions in the Bangsamoro Basic Law (BBL) and with government already committed towards its conclusion, we face the great risk of seeing its early failure.

The BBL is one explosive issue which could blow up to catastrophic proportions come 2015. There are just two things expected of this--success or failure. Of course, we will see how strong the Aquino administration is this year, which also happens to be an election year. Many already know that government turns into a lame duck once election year comes. Will this year be different?

Aside from BBL, there is this hanging question about the raging Maoist insurgency. Aquino, according to sources, want to sit down with the Reds. However, a faction of the left is reportedly blocking such initiatives.

Okey, we don't have a stable political environment. Is our government responsive already? Not yet. Red tape and other bureaucratic processes taint the good perception of investors. It takes just a month for a company to set shop in, say, Brazil. It takes 120 days for a foreign one to set up shop here in the Philippines. This applies of course, if the business we are talking about is not within the regulatory ambit of government.

Take a quick scan of the businesses here and you"ll find that everything now is under regulation. This is okey if the government is okey. It is bad if the government is being governed largely by unscrupulous people.

A tight regulatory environment is good for the people but bad for business. There must be a balance between Business or Capital and Consumer.

With 2015 as election year, there may be tightness in terms of regulation since many of the bureaucrats occupying sensitive posts in government are in the self-survival mode. with just a year and a half in office, it is expected that these people will do everything possible to secure their futures post-Aquino. You know what I mean.