Dutertes 8-point economic plan

by Andrew James Masigan

May 22, 2016 (updated)
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Earlier this month, incoming Department of Finance Secretary, Carlos Dominguez, presented the 8-point economic
plan of the Duterte administration. Economists across the county rejoiced as it contained the difficult but necessary
reforms we need to get the economy moving into higher gear reforms that Aquino refused to move on. Among them
is getting the restrictive economic provisions of the Constitution amended, income tax reform and a genuine push
towards reviving the agricultural sector.
The plan also committed to upholding some of Aquinos policies that proved effective. Among those singled out were
the acceleration of infrastructure spending to 5 percent of GDP; expansion of Public-Private Partnerships; prudent
fiscal management; a renewed focus on tertiary education; and the continuance of the conditional cash transfer
program.
All in all, the 8-point plan hits the mark on multiple levels in that it maintains what is good, discards what is bad and
infuses what is necessary.
But good as the plan may be, it can always stand improvement. Before the plan is written in stone, allow me to bring
forward five other issues that require executive attention. Perhaps the Duterte team will deem them worthy to be
considered a priority.
Widen our manufacturing sector
Urgently needed is an industrial development plan to widen our manufacturing base. Unbeknownst to many, our
struggling manufacturing sector is a two edged-sword. Apart from rendering us import-dependent for most capital
equipment, intermediate goods and even consumer goods, our thin manufacturing base also serves as a trap for our
agricultural workers.
See, ours is a society where 31 percent of the population rely on farming for their livelihood. More than 32 million of
our countrymen split the ever-shrinking agricultural pie which now amounts to only R17.50 billion. The average farmer
today earns a meager R105,000 a year. Understandably, many wish to migrate to sectors offering higher income.
For the lucky few who are able to send their children to school, the logical path would be for them to migrate to the
manufacturing sector where they can earn minimum wage. Call centers are not an option since it requires more
sophisticated skill sets.
The dearth of jobs in the manufacturing sector leaves those in the farming sector with no option but to remain where
they are. This is why it is a trap. It is the gaping hole which prevents the poorest of the poor from improving their lives.
The DTI has come up with multiple industry road maps to rejuvenate some 40 industrial sectors from automotive to
chemicals, furniture to electronics. This is a good foundation from which the Duterte team can build on. It must be
considered a priority.
Diversification of IT-KPO sector

Our IT-KPO industry is an unqualified success and a strong leg in which the economy runs. Last year, it generated
nearly $22 billion and provided jobs for 1.1 million Filipinos. Well and good. The downside is that the long-term
prospects of the IT-KPO industry is bleak and we must prepare for it.
As of last tally, close to 65 percent of our IT-KPO industry is comprised of voice related services like telemarketing,
customer support, and the like. The barrier to entry in this arena is low, hence, Filipino telemarketers can easily be
replaced by lower cost workers from Pakistan and Bangladesh, or more likely, replaced by machines. Our over
dependence on voice-related services is a cause for serious concern.
A study authored by a Spanish think-tank, Instituto Impressa, asserted that labor saving intelligent technologies will
soon replace real jobs in the same way machines replaced manual labor in the industrial revolution of the 1800s. The
rise of artificial intelligence will soon render many low-skill human tasks obsolete.
The study specifically identified telemarketers, technical assistants and transcribers as the first jobs to be replaced by
computers. All this is seen to happen within five years. Indeed, technology is a boon to productivity and costefficiency but also a great disruptor to employment.
What does this mean for us? Unless we climb the value chain in the IT-KPO industry and migrate the bulk of IT-KPO
practitioners to more specialized fields like software programming, animation and big data analytics, nearly 700,000
of our call center agents stand to be displaced. Along with this displacement will be a drop in IT-KPO revenues.
Again, there is urgency in the situation and the Duterte administration must put contingencies in place.
A renewed commitment to tourism development
Im sure the Duterte Administration realizes the importance of tourism development. I was surprised, however, that it
was not deemed important enough to be included in the 8-point plan.
The beauty of tourism is that it offers the fastest way to cascade economic benefits to the poor, especially in far flung
areas. It is like an adrenalin shot of economic activity that brings prosperity to impoverished localities.
The Aquino administration has done a good job in developing our tourism industry. From attracting just 3.52 million
visitors and generating $2.549 billion in 2010, we are poised to welcome 6 million tourists and pumping-in $6 billion in
revenues this year. Still, we are barely scratching the surface of our tourism potentials.
The crux to a successful tourism program is the dual mix of promotions and infrastructure. We dont have to do much
on the promotion side since we already have a good thematic campaign in place. To give it more teeth, however, all
we need to do is appropriate more funds into it. Thats the easy part. The challenging part is infrastructure and
providing seamless access to and from tourist destinations.
The Duterte ream has declared its intention to spend no less than 5 percent of GDP on infrastructure. It is vital that
the DPWH and DOTC coordinate closely with the DOT so as to get the maximum yield from our infrastructure
investment.
Technology-assisted agriculture
Mr. Dominguez singled out a rejuvenation of the agricultural sector as part of the 8-point plan. He specifically
mentioned providing support services and market access to small farmers. He also spoke about improving irrigation

in the countryside. This is all good. But I think all these will just keep the sector afloat, not to become globally
competitive.
For agriculture to have a real impact on our lives, it must leapfrog from the $35 billion sector it is today to $124 billion,
the same size of our industrial sector. To do this, it needs a change in paradigm. From time immemorial, our goal has
been modest to be self-sufficient in rice and help our farmers eke out a decent living. It is about time we give our
agricultural sector get a shot in the arm, through technology, so it can finally make a substantial contribution to the
economy.
I like to benchmark against the New Zealand model. New Zealand is the only country in the world that has achieved
first world status through agriculture. On the back of technology, New Zealand has become worlds eighth largest
producer of milk and the number one exporter of dairy products. They are massive fruit and vegetables exporters
having sold 1.266 million tons of kiwis, apples, frozen peas, sweet-corn, mixed vegetables and potatoes to markets
abroad. They have also been successful in penetrating international markets for high value agricultural products like
fruit juices, purees, jams and fruit condiments.
New Zealands position as an agricultural dynamo was achieved through six-key strategies. Massive electrification of
the countryside; open access to domestic and international markets; production through cooperatives; free access to
technology; government provision of common-use equipment; and establishment of quality benchmarks through
regulatory boards.
The Kiwi model is an agricultural program on steroids, one that trumps the slow path of agricultural development we
have adopted for decades. Incoming Agricultural Secretary, Emmanuel Piol, should look beyond merely staying
afloat.
Billboards and the Building Code
The next priority is a personal advocacy of mine.
Billboards have become a menace to our cities and they are proliferating without control. Its about time government
regulate and tighten the screws on the outdoor advertising industry.
More and more, people are beginning to feel victimized by the billboard menace. It affects us in a multitude of ways.
Heath-wise, billboards make pollution worse by blocking our airspace and trapping carbon dioxide from flowing out of
our roads and highways. We end up breathing the toxic air. Trapped air creates a hazardous greenhouse effect that
threaten the respiratory health of our people.
It is also damaging to the environment. Giant signs utilize massive amounts of tarpaulin, a material that is not
biodegradable. When disposed, they occupy colossal amount of space in our landfills. Worse, when burnt, they
produce noxious, toxic gases that poison our air. They also consume enormous amounts of electric power, a finite
resource we do not have much of.
Worse, billboards deprive the citizenry from their basic right to enjoy the natural beauty of their environs our
architecture and whatever greenery is left. It eats into our quality of life and makes our cities look like a grimy,
cluttered mess.

The National Building Code mandates a standard billboard sizes to be about 80 square meters. Some outdoor
advertising companies mock the law by building billboards as large as 2,000 square meters. They circumvent the law
by hiding behind a temporary restraining order.
Outdoor advertising companies are making scandalous amounts of money at the publics expense. They have
become the sole beneficiaries of our airspace. It is not fair. We count on the Duterte government to whip them into
following the building code.

Read more at http://www.mb.com.ph/dutertes-8-point-economic-plan/#TCbbfeRjGZA5xy8B.99