MANILA, Philippines – Will “Plan 747” finally take off during the term of President Benigno Aquino III?
Plan 747 was hatched under the administration of former President Gloria Arroyo. Then Arroyo ally and former Speaker Jose de Venecia, and former Socioeconomic Planning Secretary Romulo Neri created it in 2003.
The plan, embodied in the Medium Term Philippine Development Plan, called for a gross domestic product (GDP) growth of 7% for 7 years. This was put in place to reduce poverty by half from around 30% at that time.
Reducing poverty by half would mean the country will meet the government’s commitment under the Millennium Development Goals (MDGs). The deadline for meeting this goal is in 2015, only two years away.
In a phone interview with Rappler, Neri said the plan had a glimmer of hope in 2007, when the economy posted a growth of 7%. But things did not go according to plan, and growth was not sustained.
While Neri considered the 7.1% growth in the third quarter of 2012 a welcome development, he said this may be difficult to sustain due to the strong peso.
“It’s good but it’s hard to say if the growth will be sustained because the peso is strong. If the peso is strong, this will negatively impact on exports and domestic industries because of cheaper imports,” Neri explained.
He added that this is also the reason why the National Economic and Development Authority (NEDA) is now closely monitoring the peso and is worried about its impact on the economy.
At the National Income Accounts briefing on Tuesday, November 28, Socioeconomic Planning Secretary Arsenio Balisacan expressed his concerns on the strong peso, which he said “threatens to erode our competitiveness.”
Former Asian Development Bank Lead economist Ernesto Pernia said sustaining the 7.1% growth will be difficult considering that the growth came from services and real estate construction, which are not self-sustaining.
Pernia also said sustaining economic growth will also be difficult given the President has more than 3 years to go before he ends his term and this leaves for much uncertainty.
“[Will economic growth be sustained?] That’s a $64 million question! Note that PNoy has just 3.5 yrs to go. My misgiving re the 7.1% growth is that it’s still heavily weighted by the service sector and real property construction, which are not that robust and self-sustaining like manufacturing, industrial investment, and exports. Also I doubt that remittances from labor export that fuel consumption are sustainable in the long run,” Pernia said.
Albay Governor Jose Salceda, an economic adviser of former President Arroyo, said the third-quarter economic growth was already a testament that the Philippines has cemented its position as a tiger economy in Asia.
But Salceda said sustainability should be the focus of the Aquino administration. To achieve this, the government must fast track Public-Private Partnerships (PPPs) and reduce the price of electricity to make the country a more attractive investment destination.
“Verily, the 3Q [third quarter] is a defining moment in our economic history and we can truly assert that the Philippines has become a tiger economy of Asia,” Salceda said on his Facebook page.
“The task of sustainability largely constitute in maintaining the macroeconomic balance, rapid rollout of infrastructure and reducing the price of electricity to shift into an investment-driven growth. Otherwise, having closely followed the behavior of the Philippine economy since 1989, the quality and the complexion of the current trends offer more scope, more scale and more speed in the second half of the PNoy administration,” he explained.
For its part, local research group Ibon Foundation Inc. said the high growth in the third quarter was still not enough to provide quality jobs to Filipinos.
In a statement, it said the growth was driven by the services sector which was “relatively weak” in terms of generating jobs and increasing productivity.
Ibon said the official unemployment rate remained virtually unchanged at 7%, from 7.1% last year, with 2.8 million unemployed. The number of underemployed – or those looking for better jobs – shot up by 1.5 million to reach 8.5 million in July 2012.
“Employment is the single most important source of income for Filipinos and a robust domestic manufacturing sector and modern agriculture are the most important job-creating sectors for the country. Sustainable job generation and poverty reduction requires economic policies of active and responsible state intervention to build Filipino industry and develop local agriculture,” Ibon explained.
Plan 747 was built on the cornerstone of the Arroyo administration’s “to pursue measures that will raise productivity, reduce the cost of doing business, lower risk, and improve the economy’s growth potential.” – Rappler.com