Investments, and in the case of the Philippines, foreign investments, is a big factor in driving economic growth. Unfortunately, for the past many years, the country has been behind most of our neighboring countries in attracting foreign investments. This low performance is a major reason why the Philippines has lagged behind most of the ASEAN countries in historical economic growth. We simply have not been competitive.
There are several reasons why we have not been competitive. The major one, I believe, is that the costs of doing business in the country is comparatively higher. I have discussed the more significant of these higher costs in Part 9 of this Commentary Series (this current Part is a continuation of Part 9). These are: the cost effects of the business interruptions and damages brought about by the regularly occurring typhoons; the inadequate, slow, and therefore high cost of transport; the comparatively high cost of labor; and the high cost of electricity. I have also summarized in Part 9 my plans to lower these costs, the implementation of which will necessarily stretch over time.
We can add to this list another significant cost—the relatively higher cost of compliance with government regulations.
In addition to the costs factor are the unfavorable impressions about non-economic conditions in the country, such as the long-running communist insurgency and the unabated killings for-hire.
There is also the perceived lack of consistency and therefore predictability of judicial decisions and other government actions on matters relating to business, including taxes.
While we are fixing those higher costs and other problems to attract more foreign investments to propel economic growth, we must simultaneously enhance the growth of those economic activities that we are already significantly engaged in.
First and foremost is transforming our agriculture which I have discussed in Part 8 of this Series.
The two main drivers of our economic growth are the offshore work that are brought to our shores and the Filipino skills and labor that we take to foreign shores. These economic sources fuel the household consumption component in the demand side of our economy, which comprised a very large proportion, 72.4%, of our gross domestic product in 2019. We need to protect and enhance these economic activities, especially the offshore work which is easily portable and can disappear quickly.
Tourism is a very promising economic growth driver. We have more than sufficient manpower for this economic activity. We churn out quite a number of college graduates in the hospitality industry every year.
In addition to these major activities that we are already doing, we need to engage in activities with higher economic value which we are still not doing in any significant way.
If I were the next President, I will steer our economic growth towards the major contents and direction outlined above.
We will deliberately reduce the cost of compliance with government regulations by eliminating overlapping and unnecessary requirements and shortening the compliance time for the others. For this purpose, I will require all national government departments and agencies to reduce by at least half, in terms of compliance time, all of their respective regulatory requirements. I will require them to form dedicated small groups, for as many as necessary, in their respective offices to identify the areas where these can be done and to lead the implementation of the changes. We will get all these things completed in one or two years.
I will direct the Department of Interior and Local Government to require all the LGUs to do the same.
The Anti-Red Tape Authority (ARTA), under the Office of the President, the newly established government agency that is given such responsibilities cannot do these tasks alone by itself within reasonable time. ARTA may be better able to do its job after the national government departments and agencies and LGUs have done their own major pruning.
Included in my plan of engaging the LGUs in nation building, which will be presented in the next Part of this Series, is to reorient the purpose of the barangay system. Forming part of that reorientation is to remove the barangays entirely from the layers of government regulation. Doing so, will significantly contribute to reducing the cost of compliance with government regulatory requirements.
The long-continuing communist insurgency and the killings for-hire which certainly contribute to deterring investments will be dealt with separately. In any event, we will endeavor to put an end to the former and substantially eradicate the latter. Both of these, I am confident, can be done.
Our administration will be actively involved in upholding consistency and fairness in judicial decisions and other government actions on matters relating to business, investments and taxes.
In driving for higher economic growth, we will give priority attention to transforming agriculture, as discussed in Part 8 of this Series, to substantially increase agricultural productivity and therefore agricultural output. Part of that increased output will be directed towards developing fresh and processed agricultural foods for export.
We will be watchful of the developments in offshore work in the country and adjust to these developments to keep the activities we already have and acquire more. As to the latter, we will keep in step with developing new sectors of outsourcing work and enhance the necessary manpower skills to adequately meet their specific requirements.
To drive up tourism, I will direct the Department of Tourism to identify the potential but still undeveloped tourist destinations and, together with the Department of Public Works, develop and implement plans for constructing all the necessary infrastructures within reasonably established time frames. These additional tourist destinations will certainly create more employment.
We will form a select top-level group of business leaders and economists to identify the economic activities that the country can develop to produce higher value economic goods. Their work will include the specifications of the infrastructures and people skills that need to be developed or enhanced to meet the requirements of the chosen higher value economic activities.
While I will leave to this select group to make the strategic and doable choices, certain activities come to mind that may be suitable to overall Philippine conditions. These are: establishing the country as a center for research and development; state-of-the art shipbuilding (suitable to an archipelagic Philippines); manufacturing of airplane components and similar high-value parts; and production or assembly of products involving applications of current information and communication technologies, robotics, and artificial intelligence.
Many Filipinos have studied and continue to study Master of Business Administration in well-known schools abroad. Many, if not the majority, of them, specialized and are specializing in Finance. These available high education knowledge and skills fit neatly in developing a regional capital market center, especially in anticipation of the decline of Hong Kong in this sphere. When we do, we will tighten up and apply rigorously the appropriate regulatory controls that are required in maintaining a reliable and well-functioning capital market.
As we move along implementing these activities to get the country to leapfrog to higher economic growth, we will establish the necessary processes to make sure that there is proper coordination among those involved and any slacks are quickly identified and remedied.
We will exert seriousness of purpose in implementing all of these activities to successfully reach our goals and thus enable the Philippines to catch up and even exceed our neighbors or some of them in economic performance, a position we have attained many, many years before. We can and will do it!
Mr. Punongbayan is a well-experienced public accounting practitioner. He founded Punongbayan & Araullo 33 years ago and which is now one of the prominent and leading professional accounting firms in the country. On April 16, 2009, Punongbayan—along with several like-minded Filipinos—founded a national political party under the name of Buklod. As a political party, it aims to replace the present leaders with an entirely new set of trailblazers who do not carry the baggage and ineffectual governance of the past.
