2012 YEARENDER: The President and his economic team

MANILA, Philippines – The year 2012 is considered phenomenal for the Philippine economy, with growth rates that transformed this former “sick man of Asia” into one of the fastest growing economies in the world. 

Behind the 7.1% surprise growth rate in the 3rd quarter is an economic team that has served for over two years, led by Finance Secretary Cesar Purisima.

But key shake-ups in the economic cluster also occurred in 2012. It started mid-year when a vacancy at the National Economic and Development Authority (NEDA) ushered in changes at the top of 3 key economic agencies.

Socio-economic planning chief

In May, NEDA Director General Cayetano W. Paderanga Jr. resigned due to health-related issues. He was replaced by Arsenio Balisacan, former dean of the University of the Philippines School of Economics.

Like Paderanga, who was NEDA chief during the administration of former President Corazon C. Aquino, Balisacan is no stranger to government. He briefly served as Undersecretary for Planning at the Department of Agriculture (DA) during the administrations of former presidents Joseph Estrada and Gloria Macapagal-Arroyo.

The revamp in the Socioeconomic Planning agency highlighted the Aquino administration’s resolve to achieve inclusive growth. While Paderanga paved the way for an inclusive growth-themed Philippine Development Plan (PDP), Balisacan — an agriculture and rural development expert — is seen as one who will ensure that the gains of economic growth will trickle down to the masses. 

“I hope I can help in the poverty alleviation efforts of the government because that’s really close to my heart. My interest is getting the growth process to be more inclusive because our experience is, we have [economic] growth but it does not spread to the poor,” said the author of several books and academic papers on poverty and development in an interview with Rappler in May 2012.

“Even the President understands that we are so Manila-centric. You’ve seen some of my mumbers, the poverty is in the countryside. If we tackle that, even urban problems will be mitigated,” he added.

Transportation chief

The leadership change at the Department of Transportation and Communication (DOTC) came during one of the saddest periods for the Aquino administration and the country, the death of Interior and Local Government Secretary Jesse Robredo.

Robredo’s tsinelas (slippers) leadership had turned Naga City into one of the finest and most prosperous cities in the country. His simple lifestyle and leadership by example set the bar high for other government officials.

The President was aware of this; he had to replace Robredo with someone he trusted, thus plucking Mar Roxas from the DOTC. And then he named another key ally to replace Roxas: Liberal Party stalwart and Cavite Rep Joseph Emilio Abaya.

While Roxas believed that taking over Robredo’s job was a huge tsinelas to fill, Abaya also felt he had big rubber shoes to fill at the DOTC. Abaya’s challenges at the DOTC included the many stalled Public Private Partnership (PPP) projects that Roxas reviewed after he inherited the projects from his predecessor, Jose “Ping” de Jesus who resigned in mid-2011.

While some were disappointed by the delay caused by Roxas’ reviews, Abaya said these laid down a strong foundation that would enable the department to move the PPPs forward. Abaya promised to fast-track these projects and crack the whip at the DOTC.

The department has opened the bidding of the LRT Line 1 Cavite Extension and Operation & Maintenance project. The due diligence for the project is ongoing. Many other DOTC PPP projects have yet to obtain an approval from the NEDA Board, the Investment Coordination Committee, or the NEDA Secretariat.

Last Friday, December 21, the PPP Center announced that the government was looking for bidders for the Mactan Cebu International Airport Passenger Terminal Building project. The department also rolled out another project, the Automatic Fare Collection System for the trains whose Invitation to Prequalify to Bid (ITPB) was published on December 17. The recent additions of DOTC projects to the list of rolled out PPPs allowed the government to meet its 8 targeted projects for the year.

“I will continue what Secretary Roxas has started. We intend to continue with the current team of DOTC. They have a high caliber team,” Abaya said. Abaya is regarded as a good soldier to the Aquino administration.

Energy chief

As Roxas and Abaya were trying to adjust to their new roles, the energy department was about to go through a similar leadership change.

By October, the Palace announced that outgoing Leyte Governor Jericho “Icot” Petilla would be replacing Rene Almendras, a close personal friend of the President Aquino, who was eventually appointed Secretary to the Cabinet. 

By November, just before the President left for the 9th Asia-Europe summit (ASEM) in Laos, Petilla and Almendras were sworn in in their new posts.

Petilla bared his marching orders from President Aquino. He said the President instructed him to work on stabilizing electricity supply, making it affordable in the long run, and continuing where Almendras took off. 

Petilla said fuel pricing will remain a perennial issue in his department. He acknowledged, too, that he will also have to encourage more investors to build power plants.

“I have my own ideas but these are all personal information that I have. I’d rather look at the real statistics, the real reasons…It’s not as simple as we think. It’s really complex and before I do anything, before I decide on anything, before I even start looking at the specific actions, I really have to look at the situation, the overall situation,” Petilla said about his decision to accept the job offered by the President. 

Balisacan’s 2014 challenge

All these new appointments have impact on where the country is headed. There is a lot riding on their decisions — economic growth, power supply, and mass transportation

For Economic Planning Secretary Balisacan, his biggest challenge for 2013 will not be in sustaining economic growth. Economic growth is given in an election year. Each time an election is held in the Philippines, Gross Domestic Product (GDP) growth gets a boost from election spending and household spending. 

But 2014 will be tricky. If growth in 2013 will be as high or even higher than 2012, the high base factor can set in, causing economic growth to appear slow since data are compared year on year.

The NEDA chief is banking on the government’s PPP Initiative to help sustain economic growth. The PPP Center said around 6 projects will go live next year, which means construction will begin in 2013. 

When this happens, the investment of the firms undertaking them will increase overall investment in the country. This will also create jobs and boost the capacity of employees to spend. Around two-thirds of the Philippine economy is still composed of consumption spending. 

Abaya and traffic

For Secretary Abaya, one of the challenges he has to deal with is the traffic that will be caused by the construction of these PPP projects.  One of the components of this task is to improve the mass transit system, especially in Metro Manila. He has to resolve issues surrounding the MRT 3, especially now that the government will be taking over it.

Abaya will also have to foresee that other rail projects are kept on track, especially those set to be funded through PPPs. Some of these include the MRT Line 7, whose commercial contract, to date, has not been approved by the government. The proponent for the line, San Miguel Corp (SMC), has however been able to secure funding from the Japanese government, through the Japan International Cooperation Agency (JICA). This will allow the corporation to start construction immediately.

Abaya will also have to improve and expand the capacity of the country’s airports. He will have to see to it that the 14 airports that are slated to start their night operations will do so on time. Other airports under the PPP scheme that need to be pursued are:

• Enhanced O & M of the New Bohol (Panglao) Airport
• Operation & Maintenance of the Laguindingan Airport
• Operation & Maintenance of the Puerto Princesa Airport

Petilla, looming El Niño

For Secretary Petilla, the biggest challenge especially for 2013 is the looming El Niño that could again result in a power crisis in Mindanao. Most of Mindanao’s power source is anchored on water sources so the coming El Niño, which is expected to start as early as January 2013, will be a key challenge. 

A power crisis in Mindanao, particularly in an election year, is something that Petilla has to avoid. As early as October this year, power firms have warned about government a repeat of the 2010 power crisis next year. The power crisis in 2010 resulted in 10 to 12 hour brownouts in Mindanao. 

Petilla knows how crucial blackouts and intermittent power supply will be in the 2013 polls. He said some compromises will have to be made to address the problem. Cooperatives and power generators will have to agree on how to maximize optimal power for Mindanao consumers, according to him.

These challenges will make 2013 and 2014 a tough one for the President’s economic team. – Rappler.com