Duterte's development plan: Recycled, failed economic policies
(First of two parts)
The Duterte administration's public launch of its Philippine Development Plan (PDP) 2017-2022 on June 2 somewhat coincidentally happened the day after the supposed June 1 end of the 5th round of the peace talks between the Philippine government and the National Democratic Front of the Philippines (NDFP). The cancellation of talks by the government is unfortunate because discussions on a comprehensive agreement on social and economic reforms (CASER) were meant to take up most of this round. This would have been an opportunity for new thinking on the part of the government to replace the failed neoliberalism of old.
The Duterte administration came to power almost a year ago on the promise of change. This presumably included changing the economic policies that keep tens of millions in poverty and transforming the economy into a developed and sustainable one. The Philippine Development Plan (PDP) 2017-2022 unfortunately recycles failed "free market" globalization policies of past administrations. The only "change" is to further increase profits and wealth for a few at the expense of real development for the many – which is no change at all.
The PDP 2017-2022 acknowledges many of the features of the country's economic backwardness such as weak agriculture, inadequate industrial development, job scarcity, continued poverty and low incomes, and stagnating social indicators. It also surpasses previous plans in the attention it gives to international trends including the protracted global economic crisis, populist and protectionist tendencies, inequality, and climate change.
However, it has a simplistic and outdated explanation of the problem with the economy. According to the plan, the main problem is that the government restrains development by being unfriendly to business. The ideological justification for this is the quasi-religious faith that capitalist profit-seeking amid as free and unregulated markets as possible will solve social and economic problems. This notion also gets self-serving support from foreign investors and domestic oligarchs who want the state to put their narrow interests above those of the nation and long-term development.
The plan will fail to transform the Philippines into the "prosperous middle-class society where no one is poor" declared by the government. This is because the plan will keep the country's agriculture and industry backward and mere adjuncts of foreign capital. Unemployment will remain high, incomes low, and Filipinos forced overseas for work. Growth spurts driven by debt and speculation will only become fewer and farther between. Any increase in per capita income will be mostly because of growing concentration of wealth in a few rather than higher incomes for the majority.
The PDP 2017-2022 says that it is anchored on the AmBisyon Natin 2040 long-term economic vision for the country and is also guided by the 0+10-point Socioeconomic Agenda of the Duterte administration. The plan begins by taking a long view of the country's trajectory against a reading of global and regional trends and prospects.
The plan lucidly presents its approach over 435 pages. It talks about "enhancing the social fabric" by improving governance, the administration of justice, and promoting Philippine culture and values. The inclusion of a distinct chapter on culture is innovative but at the same time because there is nowhere any mention of nationalism, alarming.
The next three sections are the sum of its economic policies. The plan is conscious of public frustration with long-standing poverty and worsening inequity and talks about "inequality-reducing transformation."
This section elaborates on expanding economic opportunities in agriculture, forestry, fisheries, industry, and services, and on human capital development, on reducing vulnerability, and on building safe and secure communities. It talks about "increasing growth potential" through exploiting a so-called demographic dividend and advancing science, technology, and innovation. And it asserts its free market orientation under the rhetoric of "enabling and supportive economic environment," spanning macroeconomic policy and national competition policy.
The next section highlights the Duterte administration's supposed points of emphasis. The "foundations for sustainable development" talk about attaining a just and lasting peace, ensuring public order and safety, ensuring ecological integrity, and accelerating infrastructure development. The plan is particularly obsessed about insufficient infrastructure being a binding constraint. The final section is just about plan implementation and monitoring.
While lucid, the plan is still wrong and will keep the Philippines backward. Three major flaws immediately come to mind, all of which stem from the plan's obsolete market fundamentalism.
First, the plan avoids correcting the severe asset inequities and income imbalances that keep millions of Filipinos marginalized from meaningful economic activity. This means that all the plan's rhetoric about creating economic opportunities will really just mean greater profitable opportunities for the few who have the accumulated assets and incomes to begin with. Free market economics exalts asset accumulation as proof of efficiency and income inequality as incentivizing efficiency.
The plan goes on at length about increasing agricultural productivity. It correctly identifies the need to improve farm technologies spanning research and development, technology adoption, mechanization and post-harvest facilities. It also rightly points out expensive and inadequate irrigation, limited access to credit and insurance, and weak linkages to the industrial and service sectors. The measures to improve these are potentially welcome.
The problem, however, is that these measures will create opportunities mainly for farmers, but especially rich farmers, who already own and control the most important rural asset: land. Millions of landless peasants and farm workers on the other hand will gain peripherally, at best, or in many cases likely not at all.
The plan is unfortunately oblivious to how decades of land reform, including under the most recent Comprehensive Agrarian Reform Program (CARP) since 1987 and its later extension, have failed to genuinely distribute land to millions of farmers nor given them the means to make this productive. Persistent landlessness and monopolies on land are the greatest barriers to improving agricultural productivity.
The plan mentions agrarian reform but remains fixated on its mere administrative implementation or the paper distribution of remaining reported backlogs. A better starting point would be to explain why land ostensibly distributed has ended up re-concentrated in the hands of landlords, agribusiness corporations, and real estate developers. Merely continuing pseudo-distribution of land will not resolve rural poverty.
Having said that, the change in policy towards free land distribution to landless farmers and agricultural workers is still a significant policy shift. This is an important achievement from decades of militant struggle by the Philippine peasant movement and successfully clinched by the incursion of peasant leader Ka Paeng Mariano into government to helm the agrarian reform department. It is at least one part of correcting severe imbalances in rural power (with the other part increasing the confiscatory aspect of land transfers).
The plan is as unfriendly to workers as it is to peasants. It seeks to strengthen implementation of the two-tiered wage system whose tendency is to push down the basic floor wage while making an increasing part of it, the so-called productivity tier, merely voluntary for employers.
The net result will be to further repress worker pay whose real level, or taking inflation into account, has already fallen to lower than it was fifteen years ago. Yet raising wages is among the most important instruments for making growth inclusive and benefiting millions of workers.
The plan also pushes to worsen inequity in the country by pushing for the Department of Finance's (DOF) grossly regressive tax reform program. The DOF's tax plan seeks to reduce income and wealth taxes paid by rich families and large corporations and off-sets this with higher consumption taxes on the country's majority including the poorest Filipinos.
This is camouflaged as "broadening the tax base" (i.e., taxing more Filipinos) and "making taxes internationally competitive" (i.e. reducing taxes paid by the rich) amid hype about greater simplicity and efficiency. Yet a progressive tax system that taxes the rich more and the poor less is a critical measure for reducing inequity in the country, aside from raising resources for government social and economic services.
Sonny Africa is the executive director of IBON Foundation, Inc, an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues. He wrote this as part of a series of Ibon features.