This was the recommendation of former Evercore Asia Limited chairman Stephen CuUnjieng at the economic and political briefing on Nov. 17. The forum anchors the regular strategic planning process of the Lopez Group.
CuUnjieng, an independent director of First Philippine Holdings Corporation, stressed the need to get into manufacturing in a big way to address the economic needs of all Filipinos.
“In a high population country, industrialization has been the only mode to prosperity and full employment. With 110 million Filipinos, we cannot go directly from agriculture to a service economy,” he said.
While the Philippine economy underperforms in ASEAN due to expensive and inadequate infrastructure, the lack of manufacturing, and a burgeoning population, CuUnjieng believes Filipinos should get into heavy industry because of necessity.
“Some things go beyond economic and political expediency, some are social and developmental necessities,” he said.
He sees immediate opportunities in agriculture, mining, renewable energy, tourism, logistics and education. “All this needs a dynamic private sector and effective government,” he concluded.
Former Bangko Sentral ng Pilipinas deputy director Diwa Guinigundo in the same forum said “economic scarring due to the pandemic will have a prolonged impact of up to 2026,” noting the increasing number of countries that experienced recession in 2022 across the globe.
In addition, rising prices have led central banks to raise real short-term interest rates. This has increased credit cost and reduced access to credit for businesses that cannot afford the cost of borrowing.
“Most of the downside risks are beyond our control, for example the COVID-19 pandemic and its effect on global tourism and travel, the UkraineRussia war and its effect on oil prices and energy prices in general. However, we can do some things to cushion their effects, for example raising labor productivity to increase economic output,” Guinigundo said.
He said the third quarter growth in gross domestic product of 7.6% showed resiliency in the Philippine economy because this happened after tight monetary and financial policies were put in place by the Bangko Sentral beginning in May 2022. Nonetheless, downside risks remain from high inflation, the huge balance of payments deficit (“we spend more foreign exchange than we earn”) and increasing public debt.
Guinigundo expects high inflation to persist in 2023, increased government borrowing, higher interest rates, greater digitalization and more stress on green or sustainable finance.
Making sense of the past
Columnist Manuel Luis Quezon III shared a string of observations that summarized how communication trends and opportunistic political alliances in the last 40 years led to the restoration of the Marcoses in Philippine national government. This resulted from a triple alliance among the Marcos family, former President Gloria Macapagal Arroyo and former President Rodrigo Duterte and their allies.
Quezon noted the diminished influence of mainstream media in elections, with the agenda now being set by new political intermediaries principally in cyberspace where accountability is not significantly expected. Most important, “celebritized politics” has superseded “civic politics” such that it is possible for the top two elected officials to have no strong political party behind them.
“It doesn’t matter who sits in Malacañang. All the so-called parties in congress have always coalesced into super-majorities… President, once popularly-elected, will politically thrive within a narrow range of opinion,” he said.
Quezon also called attention to global “megathreats” identified by Turkish-born, IranianAmerican economist Nouriel Roubini such as inflation in the time of recession, an aging population that will crash pension and health care systems, the rise of authoritarian regimes driven by rising income and wealth inequality, and the climate crisis, “which will cause untold, irreversible economic and human disasters if it continues to be ignored.”
(Story/Photos by:Carla Paras-Sison)