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It’s in the regions stupid!

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Bernardo M. Villegas

Bernardo M. Villegas

I am very glad that, because of speaking engagements, I am able to travel quite a lot out of Metro Manila and see for myself what is happening in the Philippine regions. Last June 18, for example, I had to address an assembly of bishops, priests, nuns and lay people on financial economics in Tagum, Davao del Norte. My land trip from Davao, passing by Panabo, Carmen and finally to Tagum (about an hour of travel) confirmed what I had heard about the massive building program of roads and bridges in the countryside, in regions far away from the National Capital Region. It was almost like traveling from Manila to Batangas City in which urbanization is all over the place. I now understand why the masses are strongly in support of the Duterte Administration despite all the political noise from the elite and foreign critics. There is visible evidence that the money of the government is being spent finally in favor of the countryside vs the here-to-fore epicenter of growth like Metro Manila and Metro Cebu. As I heard form Secretary Mark Villar himself, money budgeted from government coffers for the Build Build Build program will be mostly spent in the provinces. If Manila and Cebu want their urban infrastructures improved (metro railways, airports, skyways, etc.) let First Pacific, San Miguel, Megawide, Meralco and private enterprises do the building through Private Public Partnership (PPP) projects. The farm to market roads, irrigation systems, post-harvest facilities and other infrastructures that benefit the poor in the countryside will be the responsibility of the State.

That is why, as Michelle V. Remo reported in a recent publication of the Investor Relations Office of the Central Bank, all of the seventeen regions of the Philippines posted economic growth in 2018 in line with the government’s aim of inclusive and sustainable growth. An even better news is that 14 regions surpassed the National Capital Region (NCR) in growth in 2018 and can continue to do so for the coming years. Metro Manila is losing a lot of steam because of the billions of pesos lost every day through the horrendous traffic problem. There is also the deliberate policy of Government to discourage the location of BPO-IT investments (which earn some $25 billion yearly) in the Metro Manila region. The government has long disallowed the establishment of industrial zones in the National Capital Region, a policy that has benefited the booming provinces of Laguna, Cavite and Batangas. In fact, as I wrote in a recent column, Batangas is already poised to be the next Metro Manila.

The consumer spending resulting from the more than $30 billion of annual remittances from Overseas Filipino Workers are also being spent mostly outside of NCR. All these augur well for a more equitable distribution of income in the country. The top ten regions in growth in 2018 were Bicol (Region V) at 8.9%; Davao (Region XI) at 8.6%; MIMAROPA (Region IV-B) at 8.6%; Central Visayas (Region VII) at 7.6%; CALABARZON (Region IV-A) 7.3%; Cordillera Administrative Region at 7.3%; Central Luzon (Region III) at 7.1%; Northern Mindanao (Region X) at 7.0% and Central Mindanao (Region XII) at 6.9%. The National Capital Region was a poor 15th at a measly 4.8% topping only Cagayan Valley (Region 11) and CARAGA (Region III). This trend can only intensify if a new leadership in the Department of Agriculture can finally address the poor performance of the sector that employs some 40 percent of the labor force and where poverty incidence can be as high as 60%.

After a more productive agricultural sector, especially in the coconut regions, the other mostly countryside-oriented industry is tourism which in addition to the approximately 7 million foreign tourist arrivals yearly is bolstered by a domestic tourism that is now numbering more than a hundred million arrivals if we include repeat travels of domestic tourists who usually travel with entire families and clans. Given present airport facilities and related infrastructures (especially the Philippine Nautical Highway constructed during the Administration of President Gloria Macapagal Arroyo), the areas that will most benefit from tourism will be CALABARZON (especially Batangas); Central Luzon (especially the so-called Pampanga triangle of Angeles, San Fernando and Clark); Central Visayas (especially Bohol and Negros Oriental), Western Visayas (especially Iloilo), and the whole of Palawan (which has 2,000 islands); Davao; and Cagayan de Oro. In order to compensate for its handicap of congestion and overdevelopment, the NCR should encourage the conversion of numerous empty lots in the nearby provinces of Laguna, Cavite, Batangas and Quezon into farms that will grow high-value crops like leafy vegetables and fruits which have a large market of more than 15 million people in the Metro Manila area. There are seed companies like East West Seed and Harbest that are very active in transferring technology to would-be farmers among especially the middle class who can earn attractive profits from urban gardening. The supply of such high-value food products would help to mitigate the inflationary pressure of food for the consumers in the NCR region.

Another good news is that the Build Build Build mentality is also being aggressively applied to human capital development. The present Administration is recording the government’s biggest investment in such social services as education and health so far. Under the Duterte Administration a law has been passed that grants free tuition in state-run colleges and universities, a program that represents a monthly expenditure of P3.5 billion to shoulder the cost of tertiary education of students enrolled in the state-run schools. On February 20, 2019, the President signed the Universal Healthcare Act, which provides healthcare coverage of all Filipinos. Under this law, all Filipinos are automatically enrolled in the National Health Insurance Program. Over the medium term, these acts will convert the young, growing and English-speaking population of which we boast into real assets for the national economy.

For comments, my email address is bernardo.villegas@uap.asia.

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