Transitioning to the next administration

Published May 17, 2022, 4:31 AM

by Dr. Bernardo M. Villegas

Part 3

            President Rodrigo Duterte and his Cabinet cannot be accused of adopting a nihilistic indifference to what will happen to the next Administration as King Louis XV of France did when he uttered the famous phrase “Apres moi le deluge” (After me, the flood)to Madame Pompadou.Although they cannot prevent the physical floods that will surely inflict damage on the Philippine economy after they are long gone, President Duterte and his Executive team wanted to make sure that they lay down the necessary conditions for the next Administration to build on the strong foundation that we have described in the last two articles, thanks to the accomplishments of the outgoing Government.  In Executive Order (EO) No. 166, signed by President Duterte last March 21, it was clearly stated that “There is an urgent need to adopt policies on economic recovery to sustain current economic gains, minimize the pandemic’s long-term adverse effects and restore the country’s development trajectory.”

            The most immediate recommendation was understandably about how to handle the economy’s exit from the pandemic.  In great contrast with the Zero COVID policy still being followed by some our neighbors, notably China, the EO advises strengthening the country’s healthcare capacity and accelerating the coronavirus disease 2019 (COVID-19) vaccination program, including the reduction of restrictions on the use of COVID-19 vaccines by the private sector.  Demonstrating that lessons have been learned from the initial knee-jerk response to the virus, the EO strongly recommends the further reopening of the economy, expansion of public transport capacity, and the resumption of face-to-face learning. 

            Special attention was given to the domestic tourism sector that already has shown signs of a very strong rebound.  I personally have witnessed how Baguio was crowded by domestic tourists during the last Holy Week.  The traffic to the summer capital starting Holy Monday was literally kilometers long.  I was pleased to observe that the LGU of Baguio already followed EO’s recommendation of streamlining the requirements for domestic travel, limiting these to vaccination cards or negative RT-PCR test results for unvaccinated individuals and a QR code that can be scanned by various contact-tracing applications.  Although foreign tourism is expected to strongly recover only in 2023–2024, I already saw some signs of the positive impact of loosening requirements for international travel, such as providing quarantine exemptions for vaccinated foreign tourists.  Let me emphasize, though, that to immediately benefit all the establishments, both large and small in the travel and leisure industry, we should focus on the potential market of some 60 million middle-income Filipinos who were travelling from their respective homes to other places within the Philippine Archipelago before the pandemic.  Filipinos are among the most travel-itchy people in the world.  Especially after being couped up for two long years, they are more than ready to indulge in “revenge traveling.”  The next Administration should focus on policies and programs that will immediately stimulate domestic tourism, especially in the Ilocos region or the Bicol region, depending on which of the two most probable winners will be elected President.  After the OFW remittances and the earnings of the BPO-IT sector, the travel and tourism industry is the third strongest engine of growth, accounting for some 12% of GDP.

            So that the next Administration does not have to “reinvent the wheel,” the EO recommended that the government shift the focus of decision making and government reporting to “empowering metrics” such as the total number of severe and critical COVID-19 cases, case fatality ratio, and total vaccinations.  This will help the government to avoid unnecessary changes in alert levels and encourage people to be vaccinated.  The resumption of face to face classes for the youngest members of the population will give the right signal to the adults of avoiding unreasonable fear of the epidemic, thus benefiting transport, retailing, entertainment, religious services, sports and other sectors in which large public gatherings attract crowds of people.  The correlation between avoiding the epidemic of fear and the recovery of the national economy was already demonstrated during the last quarter of 2021 when GDP grew at 5.7%.

            Once these obvious measures that address the immediate response to the waning of the pandemic are implemented, the highest priority of the Government should be given to two areas of concern:  the attraction of long-term equity capital, both domestic and foreign, to key sectors of the Philippine economy and the increase of agricultural productivity.    The first we already have discussed in the first article of this series.  We shall give some recommendations as regards the second, i.e. how to improve the productivity of the agricultural sector.  In a meeting of the advisory board to the Department of Agriculture recently, top officials of the Department of Agriculture outlined what were the key pillars of the ongoing programs to improve agricultural productivity that they wish would be adopted by the next Administration.  These are consolidation, modernization, industrialization and professionalization.  In my own vision, consolidation should especially refer to the amalgamation of small farms, especially in the coconut and sugar sectors, into largeunits that will help the attainment of economies of scale in mechanization, industrialization and digitalization.   A quantum leap in agricultural productivity in these and other sectors (such as fruit and vegetable farming) can be attained if we are able to distinguish between the ownership and the actual use and management of farms.  The small farmers owning one to two hectares of land substantially increase their incomes if they are able to join cooperatives, nucleus estates, “corporatives” and other forms of large-scale farming through the lease of their land to the organizing enterprise.  The coconut industry can come out with much higher-value products (coconut water, sugar, milk, coir, husks, etc.)if the small farmers partner with a large corporation that can take charge of transferring technology, obtaining credits, processing of the raw materials derived from the coconut tree and marketing the products. 

            Farmers are already benefiting from some aspects of Industrial Revolution 4.0 through the digitalization of their marketing and finance functions.  Ironically, some of them have not yet benefited from Industrial Revolution 1.0 (mechanization of their farming, harvesting and warehousing).  Vast numbers of small farmers still have to benefit from Industrial Revolution 2.0 which was the age of electrification.  Modernization and industrialization will be hardly possible in agriculture if many farmers do not have access to electricity and therefore also to internet connections.  It is important to introduce solar energy in remote areas that are off the grid.  Finally professionalization should be pursued at all levels of the supply chain in agribusiness (farming, post-harvest, cold storage, processing and manufacturing, retailing, etc.) through more relevant Agritech courses that are not part of the formal education sector.  We need to orient many more our youth to tech-voc programs that cultivate relevant skills that do not need a college degree.

            In the very short run (next six to twelve months), as the economy suffers from soaring prices of basic food products, the programs suggested by the Department of Agriculture are:  a) Provide fertilizer vouchers especially to subsistence farmers; b) Ratify the Regional Comprehensive Economic Partnership to allow cheaper imports; c) Seek bilateral discussion with fertilizer-producing countries; and d) Provide fuel vouchers for transport of priority commodities.  Also ride on the wave of numerous non-farmers becoming “plantitos” and “plantitas” investing some of their savings in cultivating small plots of vegetable gardens that can increase the supply of these products highly demanded in urbanized areas.  The slogan “Plant, Plant, Plant” should be addressed not to subsistence farmers who do not have the working capital to invest in the necessary inputs for high-value farming but to middle-class households who have both the small plot of land and the working capital to produce such products as lettuce, cabbage, pepper, papaya and others that agritech firms like Harbest and East West Seeds are making available  (together with the appropriate technology ) to interested part-time farmers among middle-class households.

            The Department of Agriculture has also some unfinished business to hand down to the next Administration.  These are summarized below:

  1. Transition from food security to food sovereignty.
  2. Raise productivity, efficiency and competitiveness of the agricultural sector, including rice-based diversification of crops.
  3. Livestock, poultry and corn development program.  Meet the continuing challenge of the Asian Swine Fever (ASF) and the impending threat of the Avian flu.
  4. Development of the fishery sector.
  5. Implementation of the Coconut Farm Industry Plan
  6. Mainstreaming the Integrated Research and Development and Extension Plan
  7. Development of high value crops
  8. Promotion of digital technology
  9. Further strengthening of the coordination between the Department of Agriculture and the LGUs, especially in light of the increased funding that the Mandanas-Garcia ruling will make available to the LGUs.

The next Administration has no shortage of immediate programs to implement to meet the most urgent economic problems of the first year of its existence.  Fortunately, there are enough members of the present Government who have had the foresight and concern for the common good to prepare a To Do List for them. 

For comments, my email address is [email protected].

 
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