May « 2010 « Perspective

Commentary:
Fearless Economic Forecast on the Incoming Aquino Administration
Carl Ala, a political economist from the University of the Philippines-Manila
Granting that president-apparent Sen. Benigno “Noynoy” Aquino III will be proclaimed and take his oath as the next head of state of the Philippines in spite of the numerous allegations of electoral fraud, then we may just have an extension of the neo-liberal economic policies of the current regime. It must be noted that Noynoy was also a student of President Gloria Macapagal-Arroyo who was then teaching Economics in Ateneo de Manila and her top economic adviser Albay Governor Joey Salceda is Noynoy’s classmate.
Now that Salceda is already on Noynoy’s camp and they also have the same economic mentor and moorings then from all indications the Aquino administration will continue to carry out liberalization, privatization, deregulation, curtailment of social rights, reduction of social services and increased taxation at the expense of the people under the policy of free market globalization. As a prominent social scientist said the US, foreign banks and corporations will continue to extract superprofits and plunder the country. The Aquino regime will be grossly incapable of stopping the widening trade and budgetary deficits and the mounting debt burden. The fiscal and sovereign debt crisis will shake the Philippine economy from the base to the rafter and will be used by the foreign banks and corporations to further bend the Philippines.
As for land reform the Hacienda Luisita issue will continue to be very controversial and would serve as the ultimate test for Noynoy’s agrarian reform policy. If in the first 100 days of his presidency he has not ordered the Cojuangco clan to withdraw their case in the Supreme Court contesting the ownership of the 6,453 hectare estate, then the farm workers of the hacienda will have to struggle more fiercely to get their land.
In taxation, Noynoy first said during the campaign that he will not impose taxes during his term when elected but in a span of a few weeks he retracted. But considering he has Sen. Ralph Rector, Sen. Mar Roxas and Joey Salceda the primary proponents of the reformed value added tax (RVAT) then we could expect more taxes particularly the expansion of the RVAT from 12% to 15%.
In employment, Gov. Slaceda estimated that it would immediately add P642 billion in new investments and 642,000 jobs in Aquino’s first 18 months in office. But I beg to disagree and this is extremely exaggerated considering that the country is still reeling from the effects of the global financial crisis and we are now feeling the aftershocks of the European debt crisis. Many are still wondering on the sustainability of US economic recovery and the strengthening of the dollar. Besides all these is the brewing war between North and South Korea so I think that investors would stay clear of East and Southeast Asia for at least 6 months or at least if and when the tensions have subsided and their relations normalized.
Earlier also the outgoing administration moved to eliminate oil import tariffs for all oil players but this will only make matters worse and increase oil prices because this may just serve as a smokescreen so that they can now raise the RVAT.
So it must be seen that the incoming administration has a lot of economic problems to deal with and it will not be smooth sailing for Filipinos, but as things stand I do not think that Noynoy’s economic team can solve these problems without doing something radical. If they stick to the same old formula that Gloria used then we will surely have more headaches. Unless genuine agrarian reform coupled with nationalist industrialization is implemented in our country which I hope that the new administration at least sees as an option, then we will continue to be a laggard economically, politically and culturally. We must wake up and see what we need to solve and remind the incoming commander in chief why he is there. # # #