May 012013

COTANGENT – By Daphne Cardillo

DaphneCardilloOver a decade ago, some economists and government planners were considering the possibility of the Philippine’s joining the rank of the Newly-Industrializing Countries (NICs) before the end of the 20th century.  A few indicators were cited like per capita income and per capita growth rate, population growth, and factor productivity as some measures for government to direct its policies for economic growth.  However, we are already at the beginning of a new century and recent economic indicators prove otherwise.  It appears more likely that we are heading towards one of the Non-Viable National Economies (NNEs).We are on the brink of deep recession and widespread unemployment resulting from the government’s inability to service its loans.  The national government’s total debt is observed to stand above 70% of the Gross National Product, of which international standard sets 70 per cent as the safe limit.  In any event, the government may be forced to default on its loans and cut off the inflow of foreign and domestic capital.

But even without this debt crisis, the industrialization program laid down during the Marcos years is not being sustained.  A huge amount of borrowed capital was invested in the construction of major industrial plants but a few have become un-operational while others are up for sale.  I doubt if there is a return of investment at break-even point after all those debt servicing.

Simply focusing on the manufacturing sector which is the trademark of an industrializing state, the Philippine experience still lags behind with its few Asian neighbors.  The industries created were heavily dependent on imported inputs and failed to develop forward and backward linkages with the other local industries in the country.  As a consequence, it has to export its finished products like copper thus competing in the world market which can only be at a disadvantage.  In addition to this, a lot of by-products are simply laid down to waste, unutilized due to the absence of another type of processing infrastructure, and not even properly disposed thereby exposing the environment of their toxic elements.

A few of those manufacturing plants that are processing products in their rawest forms area not also following standard safety measures thereby endangering the environment.  News would erupt every now and then of lakes and bodies of water being polluted to poisonous levels, not to mention of forests cleared and denuded in the first place.  In Leyte alone, we had reports of acid rain experienced by some people in their locality which is situated near an industrial estate.

Finally, the remaining export-processing zones of the martial law years still remain at the “cottage industry” level.  Except that they are producing goods en masse, like textiles.  Timex, the timepiece that have on its label “Philippines” is not totally manufactured here.  What we have is only an assembly point, the last stage of production whereby spare parts are being assembled after which the finished products are made ready for the market.

There is still a lot of groundwork to be laid for industrialization to be realized at the micro or even at the macro level.  We need transportation lanes like airports and docks that could accommodate cargoes for materials, abundant water supply, roads that are passable, among others.  Plus, sufficient and stable power supply.

Maybe we have not pursued the right way towards industrialization.  The government has taken the path towards export-orientation that does not promote self-sufficiency and constantly expose us at the mercy of the world market.  Maybe there is a need to gear towards production for our own domestic consumption.  That would create a new balance – the right balance.







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