By Antonio C. Abaya
There should be no doubt or argument about it. The Philippine economy has done better under President Gloria Macapagal Arroyo than under any of her predecessors since Ferdinand Marcos.
In the last two years under President Marcos, the economy contracted or shrunk by about 9 percent. The assassination of the beloved Ninoy Aquino on Aug. 21, 1983 spawned massive capital flight, which in turn caused the exchange rate to balloon, if memory serves, from about P20 to P60 to $1.
As wealthy families and investors, both domestic and foreign, scrambled to change their pesos into dollars, inflation soared to double-digit levels, the likes of which have not been known by most Filipinos now living, except during the Japanese Occupation.
This economic meltdown, combined with moral outrage over such a dastardly act, moved the usually complacent middle-class to political activism, which manifested itself in weekly street demonstrations against the Marcos Regime. The presence of a well-known figure around whom the middle-class could rally—Ninoy’s widow, Cory Aquino —gave the public protests the animus it needed, as it snowballed into the snap elections of February 1986.
Under Cory, the Philippine gross domestic product grew to 3.5 percent in 1986, 4.3 in 1987, 6.8 in 1988, 6.2 in 1989. The coup attempt in December 1989 by then Col. Gringo Honasan and then-Capt. Danilo Lim dragged the growth figures down to 4.4 percent in 1990, and subsequently to negative 0.6 in 1991. The average output growth under Cory was therefore 4.1 percent.
Under President Fidel Ramos, GDP grew to 0.3 percent in 1992, 2.1 in 1993, 4.4 in 1994, 4.7 in 1995, 5.8 in 1996, and 5.2 in 1997. The Asian financial crisis that started in July 1997 dragged the GDP growth down to negative 0.6 in 1998 as it devastated economies all over the world. The average growth under President Ramos was therefore 3.1 percent.
It should be mentioned that the low GDPs in 1992 and 1993 were due, not just to the coup attempts of Honasan-Lim in December 1989, but also to the daily power outages of up to eight hours that plagued the economy.
And the power outages were due largely to the mothballing by President Aquino of the 620-megawatt Bataan Nuclear Power Plant just before it was to be commissioned, a concession to the anti-US bases and anti-nuclear agitation of the communist movement. The slack would have been taken up by the 300 mw Calaca plant and the 300 mw Masinloc plant, both coal-fired, but the commissioning of these plants was blocked by environmentalists.
The net effect was that thousands of businesses and industries, and tens of thousands of families were forced to buy and operate their own generators, thus creating as much pollution as, or even more than, Calaca and Masinloc put together. There is a lesson to be learned here, but I doubt if Filipinos have learned it. But I digress.
Under President Joseph Estrada, GDP grew 3.4 percent in 1999 and 4.0 in 2000, until he was deposed from office in January 2001 by a military coup d’etat pretending to be people power. The average GDP growth under President Estrada was therefore 3.7 percent.
Under President Arroyo, GDP grew 1.8 percent in 2001, 4.3 in 2002, 4.7 in 2003, 6.0 in 2004, 5.1 in 2005, 5.6 in 2006 and 7.1 in 2007. To date, the average GDP growth under President Arroyo is therefore 4.94 percent. Forecasts for 2008 vary from 5.0 to 6.7 percent.
Under President Arroyo, the economy has developed an upward momentum. And the biggest element in this upward momentum is the remittances from overseas workers, which will reach $14 billion to $15 billion in 2007, compared to practically zero in the ’70s.
The corollary is that if Presidents Aquino, Ramos and Estrada enjoyed a $10 billion to $15 billion annual migrant remittance windfall during their watch, the GDP during their presidencies would have been substantially higher. If any reader can supply the annual figures for remittances staring in 1980, I would appreciate receiving them.
The other corollary is that if President Arroyo did not have this $10 to $15 billion annual windfall, the Philippine economy under her management would not have grown as much as it had in the past six years.
This is not to say that President Arroyo did not make any substantial contribution to economic growth from her own initiatives. Far from it. Her biggest success, in my opinion, is the growth of the call center-business outsourcing industry, which now employs more than 200,000 young, urban middle-class Filipinos, and is still growing fast.
If one were to revisit her Mid-Term Development Plan, which was drafted at the start of her presidency in 2001, one would note that it had three major foci: agriculture, tourism and information technology or IT. So the call-center phenomenon was an Arroyo initiative and it is a major success, for which she deserves full credit.
The passage and implementation of the EVAT is also an Arroyo success, which substantially increased government revenues, enabling it—theoretically at least—to invest more in infrastructure and social services.
But this has its limits, which may have been reached already, judging from the frantic efforts to sell government assets, such as those in the power sector. Economists tell us that a government’s tax collection efforts should amount to at least 16 percent of GDP.
Even with his dictatorial powers, President Marcos could only manage 9 to 12 percent. Presidents Aquino and Ramos were able to raise it to 13 to 14 percent. President Arroyo may have been the first president to raise that percentage to 15-16 percent, which may suggest unresolved problems in tax evasion and smuggling.
President Arroyo has also achieved moderate success in tourism, one of the three foci in her Mid-Term Development Plan. Tourist arrivals topped three million in 2007, for the first time ever. I say “moderate” because Thailand drew 13 million tourists and Malaysia 16 million, in the same period.
In 1991, Indonesia and the Philippines drew more or less the same number of tourists: one million. Since then, Indonesia’s tourist arrivals have reached five million, despite the Bali and Jakarta bombings, while we are celebrating three million. Don’t look now, but tiny Cambodia just topped two million, and Vietnam is investing heavily to develop its entire coast into a tourism asset.
President Arroyo’s third economic focus, agriculture, is, in my opinion, a mixed bag. Even assuming that production has increased in many sectors, the stark fact remains that we are not self sufficient in such staples as rice, corn, sugar, poultry, etc. and must import several billion dollars’ worth every year to meet domestic demand.
This by a country that set up the UP College of Agriculture in Los Baños (when the Americans were running this place), and hosts the International Rice Research Institute (also set up the Americans), both of which trained the agriculturists of Vietnam, Thailand, Indonesia etc., which ironically now surpass us in agricultural production.
Perhaps the weakness of our agriculture is not a paucity of modern technology, but an oversupply of people, because of a galloping population growth rate. In the ’70s, the Philippines and Thailand had more or less the same population size: 45 million. Because it had a population management program all these years, Thailand had 65 million people in 2007. The Philippines had 89 million.
For this, President Arroyo must share the blame with Presidents Marcos, Aquino and Estrada, for their wishy-washy attitude toward population management and their fear of offending the Roman Catholic bishops. (Only the Protestant President Ramos dared to defy the bishops on this issue.)
In summary, it can be said that President Arroyo’s relative success in managing the economy can be credited largely to the $10 to $15 billion windfall from migrant workers’ remittances.
Therefore, it is not accurate to claim that there is no alternative to her. In fact it can be said that the increase of workers deployed abroad—about one million a year—is due to her failure, and the failure of her predecessors, to create enough jobs in the domestic economy, forcing millions of Filipinos to seek employment abroad.
This means that she can be replaced by such eminently qualified wannabes as Manuel Roxas, Manuel Villar, Richard Gordon, Loren Legarda, Panfilo Lacson—even by Gov. Fr. Ed Among Panlilio or Antonio Meloto—and the economy would still chug along at more or less the same pace as today, as long as whoever succeeds her enjoys the $10-$15 billion windfall from the migrants.
But the big question is this: Who among the actual or possible contenders can provide the MORAL LEADERSHIP that Gloria Macapagal Arroyo has so spectacularly failed to provide?
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Reactions to acabaya@zpdee.net or tonyabaya@gmail.com. Other articles in www.tapatt.org and in tonyabaya.blogspot.com.
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