Philippine economy

[In This Economy] A new ‘super economic manager’? Why this should worry you

JC Punongbayan

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[In This Economy] A new ‘super economic manager’? Why this should worry you
Running the economy is different from running a big corporation or conglomerate. One needs to weigh the interests of all sectors in the economy, and not just promote corporate growth and profits.

In a surprising move just before Christmas, President Ferdinand Marcos Jr. seems to have outsourced his job of managing the economy.

On December 15, he signed an executive order creating a new Cabinet position that will serve as some sort of “super economic manager.”

The official title is Special Assistant to the President for Investment and Economic Affairs (SAPIEA), who will be appointed by, and reporting directly to, the President.

When the executive order was published December 18, Malacañang also announced that the first SAPEIA will be none other than Frederick Go, 54, longtime president and CEO of Robinsons Land Corporation, and nephew of the late business tycoon John Gokongwei.

This is a promotion for Go, who in January 2023 had already been appointed presidential adviser for investment and economic affairs (PAIEA). Now, that position has been leveled up to a Cabinet post, so Go really needs to divest his business interests.

At the time of his appointment as SAPIEA, Go was still serving as director, president, and CEO of Robinsons Land. But on December 20, he let go of these positions.

As early as now, one can tell that the new super economic manager post might be a game-changer. Apart from creating redundancies in the managing of the economy, it will also upend the dynamics between the President and his economic managers.

But more unsettlingly, this new SAPIEA also gives the private sector much greater say in how the economy is managed. There might be lingering conflict of interest, too, along the way.

Redundant

Let’s examine the roles of this new super economic manager. As you’ll see, he’s all-powerful but massively redundant.

First, the office of the SAPIEA “shall ensure effective integration, coordination, and implementation of the various investment and economic policies and programs of the Government.”

Wait. This is already the job description of the economic managers. So we must ask: what is the value-added of adding yet another economic manager standing between the President and the current economic team?

Second, the SAPIEA shall provide “timely, relevant, and strategic advice on matters and issues involving economic concerns based on recent economic data or information, market trends and global developments.”

Redundant, too. This is something that the NEDA secretary could and should already be doing. After all, the government’s statistics agency is under NEDA, and the NEDA secretary is often deemed the top economist in government. Why does there have to be an intermediary or conduit for economic advice, in the person of the SAPIEA?

Third, the SAPIEA shall, “in coordination with the EDG [Economic Development Group], and subject to the approval of the President, identify the priority programs, activities and projects (PAPs) in the PDP 2023-2028.”

He must also “coordinate, monitor, review and evaluate the progress of priority initiatives and PAPs…identify problem areas in the implementation thereof; and submit to the President a comprehensive report on such matters.” The SAPIEA is also tasked to “expedite inter-agency action to achieve key targets.”

Again, this is something already in the portfolio of the current set of economic managers.

Fourth, the SAPIEA will also be called to do other tasks as needed, “including representing the President in meetings and such other fora.”

Given the jet-setting tendency of this administration, expect one more person and his staff to join the President’s myriad trips – and for whom we need to foot the extra travel bill.

Altered dynamics

Apart from being supremely redundant, the SAPIEA will also inevitably upend the dynamics between the economic managers.

Before, Finance Secretary Benjamin Diokno was already serving as head of the EDG. He’s primus inter pares among the economic managers.

But now, with the SAPIEA, Secretary Diokno will have to step aside. He and other officials like Socioeconomic Planning Secretary Arsenio Balisacan, Budget Secretary Amenah Pangandaman, and Trade Secretary Alfredo Pascual will now have to report to SAPIEA Frederick Go.

Specifically, the current economic managers (and other officials in other agencies) are “hereby directed to render full and timely assistance and cooperation” to the SAPIEA, “to provide such information and data as may be required.”

In addition, the executive order stated that the SAPIEA will be the chair of the EDG, while the finance secretary will be demoted as vice-chair (the NEDA secretary is also a vice-chair).

I wonder what the economic managers are thinking now that they will be sidelined.

The SAPIEA must also “supervise and monitor on behalf of the President, the NEDA, DOF, Department of Budget and Management (DBM), and Department of Trade and Industry, and their respective attached agencies, such as the Board of Investments, Philippine Economic Zone Authority, and Securities and Exchange Commission…” All of these agencies “shall regularly report to and coordinate with the SAPIEA on such priority initiatives and PAPS.”

Apart from becoming the new central hub on all things concerning the economy, the SAPIEA will also sit in powerful committees such as the NEDA Board (which approves big-ticket infrastructure projects of government), as well as specific committees under it such as the ICC (Investment Coordination Committee), the SDC (Social Development Committee), the Infracom (Committee on Infrastructure), and the DBCC (Development Budget Coordinating Committee).

One mustn’t underestimate the power of these committees.

The Infracom, for instance, “advises the President and the NEDA Board on matters concerning infrastructure development, including highways, airports, seaports and shore protection; railways; power generation, transmission and distribution; telecommunications; irrigation, flood control and drainage, water supply and sanitation; national buildings for government offices; hospitals and related buildings; state colleges and universities, elementary, and secondary school buildings; and other public works.” Essentially, the Infracom ensures that big-ticket infrastructure projects are in line with the Philippine Development Plan, the country’s economic blueprint made by NEDA.

Meanwhile, the ICC vets and recommends projects to be financed through loans, and the ICC ensures that such loans won’t bury us in too much debt.

Apart from sitting in the NEDA Board, the SAPIEA will be a “permanent representative of the Executive Secretary to the Fiscal Incentives Review Board and its Technical Committee.” This is another powerful board that approves and hands out perks to various businesses in the country in a bid to boost investments. It’s a mechanism of the state to “pick winners,” so to speak.

In the executive order there’s also a catch-all provision saying that the SAPIEA “may also be designated by the President to act as a representative of the OP in other agencies, departments, boards and committees, whose functions are related to investment and economic affairs, subject to existing laws, rules and regulations.” Hanep.

Conflict of interest?

As you can see by now, the new super economic manager will have a front-row seat in all the major economic agencies and committees and boards of government, and, more importantly, will have much say in the decisions of these bodies.

This is part and parcel of a recent trend, where President Marcos has been appointing prominent business personalities in advisory roles.

In July 2022, shortly after taking office, Marcos created the Private Sector Advisory Council, a group of billionaire tycoons led by Sabin Aboitiz. The PSAC “regularly convenes and recommends various policies and programs under six sectors [or clusters], namely infrastructure, agriculture, digital infrastructure, healthcare, jobs, and tourism.”

Interestingly, Frederick Go himself served as tourism cluster head of the PSAC.

Note, too, that Rafael Consing Jr., the first president and CEO of the Maharlika Investment Fund, was previously serving as Go’s executive director in the Office of the Presidential Adviser on Investment and Economic Affairs. Upon his appointment to Maharlika, Consing also let go of his positions as vice-president and chief financial officer in the Razon-led ICTSI.

The increasing influence of business leaders in the running of the economy is concerning, to say the least. Sure, many of them are smart and competent. But running the economy is so much different from running a big corporation or conglomerate. One needs to weigh the interests of all sectors in the economy, and not just promote corporate growth and profits.

It’s one thing to see all these business leaders give advice to the President on economic matters. But it’s another thing to see them appointed one by one in crucial economic posts and have a direct hand in the crafting and implementation of government policies and programs – which could benefit their friends’ or family’s or own businesses in one way or another.

Remember the setup during Martial Law? When economic technocrats and business “technocrats” served alongside one another, but the second group had much more influence on the dictator Ferdinand E. Marcos, and the legitimate economic experts were increasingly blindsided? I don’t know about you, but that aspect of our economic history seems to be repeating itself in earnest.

Is crony capitalism going to be in full swing again, in the time of Marcos Jr.? This is one more thing we need to look out for as 2024 fast approaches. – Rappler.com

JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. JC’s views are independent of his affiliations. Follow him on Twitter (@jcpunongbayan) and Usapang Econ Podcast.

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  1. ET

    Thanks to Prof. JC Punongbayan for another enlightening economic article. His most relevant question: “Is crony capitalism going to be in full swing again, in the time of Marcos Jr.?” It looks like Crony Capitalism has come back starting last July 2022 after the creation of the Private Sector Advisory Council. It is now in full swing under the Special Assistant to the President for Investment and Economic Affairs (SAPIEA). These “favored ones” will be busy, if not already busy, amassing wealth under the Marcos Jr. Political Patronage System while hiding them well at the same time. Lastly, they will certainly give President Marcos Jr. his fair share.

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JC Punongbayan

Jan Carlo “JC” Punongbayan, PhD is an assistant professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler.com. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.