Just 2 To Do

Categories: Policy News and Updates

Date: 24 Jan 2015

As the year began, I suggested a to-do list for President Aquino to consider. But I’d like to focus on just two items on the list: opening up the economy with amendments to the Constitution, and establishing a Department of Information and Communications Technology (DICT).

The President has made some courageous changes that will revolutionize society: K-to-12 expanded basic education program, sin tax law reform, reproductive health, and national budget reforms (e.g., implementation of zero-based budgeting and getting rid of the corruption-prone system of reenacting budgets). These will transform society. What is now needed is to transform the economy.

All the items I listed last week will move the economy forward in a job-creating way, and should be done. But the two I cited will do the most to help create jobs.

If you allow foreigners to fully own public utilities, education facilities, etc., it will not only greatly add to the success of these enterprises but also send a message. And it’s the message that is probably the most important: “This is a country that truly welcomes foreign investment, and treats foreigners equally with locals—in anything.” It will get world media attention and get into boardrooms. The Philippines will finally get out of the shadows. If you haven’t noticed, the Philippines doesn’t get mentioned even in regional comparisons, let alone get similar levels of foreign investment.

So I’m glad Congress has recognized this and is pushing it, with the business community in support. That the President doesn’t recognize the tremendous benefit of this change is beyond me.

Fortunately, in this case it doesn’t much matter whether he agrees or not. Because, unlike laws, his approval is not necessary. If Congress agrees to the change, then it goes directly to the public to vote upon, in what is called a plebiscite. This vote would be coincident with the national elections in May 2016.

Unfortunately, the real change that should be done just isn’t politically feasible. And this would be to just remove the restrictive provisions from the Constitution—details that shouldn’t be in a constitution at all. Given that reality, Speaker Feliciano Belmonte came up with a clever and simple compromise: Just add the phrase “unless otherwise provided by law” to each of these provisions. Then, in the next administration, pass those laws.

Sadly, that means change won’t be immediate, But it will happen. I have no doubt of that, whoever will be the next president—unless it is Joma Sison, and I don’t see much chance of that. The one area that will be the most difficult is land ownership. Here, emotions will win over reality. The reality is that foreigners will own very little land, but it will attract them.

Although unnecessary, it will help if the President now supports this move—be known for it in his legacy, not known to be opposed to it, done in spite of him.

As to the DICT, I really can’t understand the President’s opposition to this. It makes no sense. And I think, as the representative of his “bosses,” he is obliged to explain his reasons for his opposition. Otherwise, this is not truly a democracy, but a dictatorship, with the leader dictating his beliefs without explanation. Let’s hope he’ll now be convinced, or explain his reasons, so we can argue against them.

And convinced he will be if he but considers the benefit it will bring. Information technology is the fastest-growing sector of the economy. There was virtually no one in it 12 years ago, and now there are one million young people with decent wages in it. GDP is growing at 6-7 percent, industry at 7-8 percent, while agriculture is barely getting off the ground. The IT-business process outsourcing subsector has been growing at around 17 percent annually (in terms of revenues) since 2010—a growth rate that will continue if it is fully supported.

The Philippines is the world leader in call centers, and is growing in recognition on the data side. It is not No. 1 in anything else. What ought to worry the President is that the service provided by call centers will gradually decline as ever more sophisticated technology makes it less and less needed. Government will be needed to support the shift.

A Cabinet-level official and a fully staffed department are needed. We have departments for agriculture, industry, tourism, etc., but not IT. Yet IT can be bigger 10, 20, 30 years from now. What it is doing is providing good, well-paying jobs. A farmer earns a measly P3,000-P5,000 a month while a call center agent takes home at least P16,000 monthly. And to get that job you have to be well-educated, so the education sector grows.

A DICT will not only help promote development (look at what’s happening to tourism with the support of a competent secretary and improving budget), but also set the necessary standards. Then there’s another important activity: to manage a coordinated, holistic system of computerization of government services, not the hodgepodge introduction being undertaken now. And computerization, apart from greatly improving public services, will reduce the bribery necessary to get approvals.

Then there’s cybercrime. If you think this is a worry now, it’s nothing to what it’ll be in the future. We need to be ready to combat it; that can’t be done in a subagency in the Department of Science and Technology.

As in constitutional change, if the President is still opposed to it, he must, as I said earlier, give us the reasons so we can address them, or agree with him and give up. We need his active support. It is moving positively through Congress, but his imprimatur will accelerate it. And getting it through before the 16th Congress ends in June 2016 is essential.

Let’s get these two done this year. Let’s transform the economy.

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