Sense of optimism

Michael Alan Hamlin

Posted on January 26, 2007

But don’t take recent gains for granted

Speaking before the Foreign Correspondents Association of the Philippines (FOCAP) last week, Senator Richard J. Gordon acknowledged the “sense of optimism” that pervades the Philippines as the peso strengthens, the market soars, and investment escalates. But he also warned that taking the current good fortune for granted would be a disservice for the country, and every Filipino.

Instead, he advised, “this is the time to ask how we can sustain this period of economic resurgence,” because “continued success is not a given.” Gordon warned that what the Philippines needs least of all is to ride the nation’s traditional boom-and-bust cycle. That relentless cycle, notable for its mostly self-inflected busts, has made the Philippines one of the least competitive and poorest nations in Asia.

Indeed, while there are those who indeed fret over the sustainability of recent gains, Gordon believes that too often their proposed boom-and-bust remedies are counterproductive. He referred specifically to the notion that a respite from politics such as canceling mid-term elections in May, as some influential sectors have urged, “may sound appealing. But it is a mirage. The hard reality is that politics and governance are crucial to sustaining our economic momentum.”

Most businesspeople would likely agree that the Philippines has gone far too far down the road to democracy to pull back. While technically non-capitalist, non-democratic countries such as Vietnam and China seem to do a better job attracting investors and managing their economies in part because they aren’t subject to political messiness, their systems don’t hold the answer to the Philippines’ challenges. Making its own system work as intended does.

For Gordon, making the Philippines work involves three key issues he refers to as political challenges. In fact, they are not purely political challenges, but challenges to national development with political, socio-cultural, and economic features. The first of these challenges is holding free, credible, and speedy elections. This is a political feature, obviously, with vested interests seeking to sustain political influence. It is cultural because of the influence of the Philippines’ padrino culture. And it is economic because it takes strong political will to drive reform.

“We are back to kindergarten school in elections management,” Gordon told the correspondents and others present. “It is totally mystifying why we have kilometric ballots, why voters must painstakingly write down every name they vote for, and why it takes weeks, even months, to proclaim election winners” when other large Asian democracies such as India and Indonesia have adopted and successfully used modern technologies to assure transparent voting and rapid reporting of results.

For its part, the legislature has passed an amended election law that is now with President Gloria Macapagal-Arroyo for signature. It provides for national automated polls in 2010. Gordon warned, “If we meet this test, we’ll win. Fail it, and we all lose.”

Gordon’s second key challenge is the Rule of Law. If you see holding free and credible elections as a significant hurdle to progress, then Rule of Law will seem truly insurmountable. But while it is a huge challenge it can be addressed as other countries in Asia have shown, notably Singapore and Hong Kong. China has likewise made significant inroads towards strengthening the rule of law, including the jailing of high-profile business people as well as officials engaged in unlawful acts.

Chief among Gordon’s concerns are the slow pace of justice – he notes that 20 years after the downfall of former President Ferdinand Marcos, government is still litigating corruption cases against his estate and its heirs – and over-regulation of business and the economy, which serves to protect entrenched interests. “When we are not over-regulated, we are inequitably regulated,” he observed.

His third challenge involves developing a collaborative, rather than an obstructionist, relationship between the executive and legislature. Such collaboration, he argued, is necessary to hasten investment in modern infrastructure, improving education and public services, and addressing graft in government. “Without modern airports, seaports, communications, power and [the] other vital infrastructure of a modern economy, the gains of the day are fleeting,” Gordon concluded.

While the senator’s remarks were eloquent and on point, they illustrate an obvious and hard reality for the Philippines and indeed all developing democracies. And it is that the answers to the challenges are clear. What is not clear is who will lead the charge.

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