Setbacks caused by corruption allegations hounding flood control projects and other public infrastructure projects are temporary and will not derail the Philippines’s bid to achieve higher growth, according to the country’s socioeconomic planning chief.
Department of Economy, Planning and Development (DEPDev) Secretary Arsenio M. Balisacan said implementing reforms that will prevent future abuses will even bolster the country’s economy.
‘We believe that the setbacks are very temporary. I like that this happened because then we can do something about these issues so that the medium-term and long-term prospects of the economy will be even stronger,’ Balisacan told reporters on the sidelines of the EU-Philippines Business Dialogue last Thursday in Makati City.
As corruption is now being ‘openly discussed,’ Balisacan said, ‘We can put our house into better order. We can put reforms. We can get these institutional processes to address these issues so we establish a better foundation for long-term growth.’
Balisacan, however, acknowledged that the corruption scandal could affect investment and consumer sentiment.
‘[Also], the external environment for investment has continued to be muted. That’s experienced by many countries. All this uncertainty in the external environment is still there. It’s not as bad as we thought it would be six months ago. The world did not sink as we thought it would with all these Trump tariffs and uncertainty in the global markets,’ he said.
‘As I said, there are positive forces and negative forces. Hopefully, the positive forces will dominate,’ he added.
The corruption issues, he said, could also lead to a slowdown in luxury spending of local consumers.
‘I like that there is a slowdown in those areas [luxury goods] because these are very import dependent anyway. The value added is low,’ he said.
Patronizing local goods, Balisacan said, will be good for the economy. ‘It creates more economic activity. Luxury imports do not really generate economic activity.’
Rice tariff review
Meanwhile, Balisacan said the Cabinet-level Committee on Tariff and Related Matters is currently reviewing the petition of farmers to revert the tariff on imported rice to 35 percent.
‘We discussed the results of consultations and review of the Tariff Commission with respect to the petition of our rice farmers for a revert on the tariff from 15 percent to 35 percent. And we had a lot of discussions on pros and cons, what are the considerations that we have to look at,’ he said.
In assessing the petition, Balisacan said the committee will have to consider the farmgate price of rice as well as the accessibility of the staple to local consumers.
‘We are also concerned about the impact of high prices of rice on inflation, which can impact on our macroeconomic fundamentals,’ he said.
He cited an instance last year and the year prior when prices of rice ‘skyrocketed’ and inflation accelerated, which prompted the Bangko Sentral ng Pilipinas (BSP) to ‘jack up the policy rates.’
‘So, it really has an effect,’ Balisacan said.
At the same time, the DepDev chief said the government is also tuning into the recent developments such as world prices which ‘have come down sharply since then for rice by over 30 percent.’
‘Our farmers bore the burden of that. Farmgate prices have also come down so much,’ he added.
As such, Balisacan said the government needs to address ‘how we can provide and ensure that our farmers remain profitable in their enterprises.’
‘Rice farming in particular remains remunerative. So that’s a kind of discussion that’s happening, how we achieve all these three goals at the same time,’ he said. ‘Obviously, you need not just tariff as an instrument to achieve those goals, but you need other tools.
‘For example, directly subsidizing the price received by our farmers would be one such policy goal or instrument to ensure that the benefits of world prices and the tariff reduction are shared by everyone.and those benefits don’t arise at the expense of our farmers,’ he added.