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By BEN RANQUE, Undersecretary
Department of Energy

PRESIDENT Rodrigo Roa Duterte has come to power on the surge of high popular expectations. Unfortunately, formidable and systemic obstacles stand in the way of achieving these great expectations.

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The Philippines is an oligarchic state dominated by powerful business interests who finance elections. These business oligarchs make and break politicians, and overawe a weak, politicized bureaucracy. They dictate and distort public policies to enrich themselves at the expense of the public good through legislative and regulatory capture. This has resulted to what is described by political economists as a booty capitalistic state, where the political winners and their financial backers help themselves to political rewards and economic rents, which in turn allow them to perpetuate their stranglehold on the State and the economy.

Political economists, both local and international, have blamed our lack of economic and social progress on the economic elite that fostered economic policies that enriched those in power while impoverishing the rest of the country.

Policy distortions and weak institutions in an oligarchic state discourage job-creating local and foreign investments by making rules unpredictable and unfair since these rules were created to conform to oligarchic interests. They also raise the costs of doing business, such as the costs of power, telecommunications, transport and cargo-handling. We have also limited foreign investments and stifled competition, which would have lowered  the costs of products and services for both local consumers and enterprises.

Investments can only thrive where rules are fair and predictable and costs of doing business are not prohibitive.

This condition of an oligarchic state is worsened with the tradition of political dynasties and the entry of narco-politics. The choice of political leaders were not determined by the Filipino people. This undermines the very democracy the Constitution stands for.

The whole economic structure is also inequitable and needs drastic transformation. Our economic system now has a surplus of funds with the banking system, highly liquid with international reserves greatly exceeding recommended levels, thanks to the remittances of OFWs and the revenues of BPOs and call centers. However, our international reserves are mostly invested in US treasury bills, making a poor country like the Philippines lend to a rich country like the US. At the same time, badly needed infrastructure is sorely lacking and the physical environment is severely degraded. The portfolio of national assets clearly needs rebalancing by transforming the excess financial liquidity into more badly needed assets like infrastructure and a safer more wholesome physical environment. Only the very rich have benefited from this financial liquidity through low interest rates to large corporate entities who borrow by the hundreds of billions, which further allow them to multiply their accumulated wealth.

On the ownership and entitlements side of the national balance sheet, the very rich dominate the national claims on resources while the vast majority own little with the poor having minimal assets. The general public has little access to common entitlements, such as good education, health services, safe streets, clean air and public parks and are highly vulnerable to environmental disasters.

The President has little time to deliver on his promises. The challenges are formidable. Constitutional, legal and institutional obstacles stand in the way. Extraordinary measures are clearly needed.

Infrastructure projects need to be implemented fast. The economic costs of Metro Manila traffic alone is P2.6 billion a day, to increase to P6 billion by 2030, per Jica estimates. A year’s delay in infrastructure to relieve Metro Manila traffic can exceed P1 trillion. However, following standard procurement regulations and bureaucratic risk aversion, particularly the fear of being charged by the ombudsman and expenditures disallowed by COA, discourage swift and decisive implementation by well-meaning bureaucrats of badly needed projects. In the meantime we have overly relied on foreign and donor funds for vital projects when local funds and contractors are readily available.

To enhance our ability to finance infrastructure and other development projects, we can transfer a substantial portion of our excess international reserves into a sovereign wealth fund to be invested in sound Philippine development projects with high economic and preferably high financial returns. We will need to overcome BSP regulations for this to happen.

The NDC, with its sovereign guarantee powers, can also be used to mobilize funds and fasttrack projects, particularly financially viable projects within the ambit of the PPP.

We will need to build new city centers and urban corridors to decongest our overcrowded urban areas, particularly Metro Manila. This may entail developing the less flood-prone upland areas into environmentally sound human settlements areas and for eco tourism while building urban and industrial corridors  in Luzon towards the Pacific coast. This will also require extraordinary presidential powers to proclaim upland areas as alienable and disposable for habitation purposes, but within strict environmental guidelines, with at least 50-percent of the upland reserved for forests and nature reserves.

Extraordinary social mobilization is also needed to resolve the problem of drug addiction running to millions of Filipino victims. The problem cannot be addressed through standard rehabilitation measures alone. Mobilizing drug addicts into rehabilitation camps to replant forests and regenerate severely damaged coastal environments will address the problem at the scale needed to make any significant impact. The military will have to be mobilized for this rehabilitation program, in cooperation with agencies such as the DENR, DA, TESDA, and DOH and LGUs and civil society and religious groups.

The drug rehabilitation program will dovetail and synergize into the reforestation and environmental regeneration program since both require mobilization of human resources, and in the case of drug addicts, for their betterment while they work on improving the natural environment. This will be patterned after President Franklin Roosevelt’s highly successful and highly popular Citizens Conservation Corps where six million poor young Americans were mobilized to plant three million trees all over the United States during the Great Depression era.

The key to removing the oligarchic capture of our political system is public financing for electoral exercise to remove the dependence of national candidates on big business contributors. Ordinary taxpayers should be allowed to contribute a small portion, say two percent of their tax payment to a political party of their choice. This can also be matched by State funds to wean away political parties from big election contributors while allowing political parties to choose candidates on the basis of merit. This will also strengthen the Philippine middle class who religiously pay their taxes as employees or small entrepreneurs and professionals.

The middle class is a base support for any functioning democracy and good governance based on sound institutions. While the poor will seek favor and protection through doleouts and patronage and the oligarchs through their control and distortion of rules, the middle class can only seek refuge in the uniform application of rules by sound institutions.  Strengthening the middle class will set the foundation for our sound democracy with properly functioning institutions.

While the CCT has established itself as the primary tool to assist the poor, it will not increase the productivity and income generating capability of the poor which is key to poverty alleviation.  Other models with productivity enhancing components will need to be incorporated and possibly replace the CCT which is basically seen as a doleout and prone to abuse and waste and leakages.  Child and school feeding program should be incorporated to diversify the CCT program and address the problem of malnutrition more directly.

Comelec, Ombudsman, COA, ERC, NTC, CAB, Marina, PPA — these agencies either stand in the way of bureaucratic decision-making and effective and timely project implementation or are highly politicized or captured by oligarchic interests. Their interventions and decisions therefore tend to be contrary to the best interest of our country and people

The constitutional reform process should be started and directed towards a unicameral parliamentary and federal system of government. Parliamentary government systems are more supportive of a strong and professional bureaucracy and more responsive to public sentiment.

However, looking at Congress now, there is no mention of electoral reforms by changing the present unitary to a federal form of government can delay the promises of PRRD to deliver great expectations. Congress could have started filing resolutions and start debates whether to transform itself into constituents assembly or pass a law paving for election of constitutional convention delegates to amend our constitution. Instead, they are busy conducting various investigations and other priorities far away from the elections promises of PRRD to adopt federal system in the country. It is not surprising neither for members of Congress to support the President because they were not voting for him last elections. Congress is not behaving and just buying time before PRRD expires by any means. This reminds us of PRRD’s famous rhetoric during the campaign: “If Congress will not behave, I will close Congress and declare a revolutionary government.”

We must remember that PRRD has only less than five years remaining in office. His doing great now in terms of governance. But how long will this take? It seems also that the oligarchs are behaving now while buying time until PRRD]s office term expires and or is shortened through destabilization moves, After which, they will be back to their happy days again. This we cannot afford to happen. We must end the great suffering of our people. A revolutionary government will be declared to overcome the constitutional, legal and institutional obstacles to the President’s ability to deliver on his election promises and the high public expectations within his term of office. The main rationale for these measures is to minimize implementation delays which are severely costly.  An advisory and consultative council with representatives from each province will be convened to replace the existing legislative bodies as a transition measure.

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