NEPA Urges Aquino Not To Follow US Lead in Facing Economic Crisis
GMA News TV
07/24/2010 | 07:19 PM
An organization advocating economic nationalism and national industrialization is urging President Benigno Aquino III not to follow the US lead in addressing the present economic crisis because it is destined to fail.
National Economic Protectionism Association (NEPA) president Bayan de la Cruz told GMANews.TV over the weekend that the US economic pump-priming and austerity measures are not applicable to the local economy because it lacks the manufacturing and industrial base and strong domestic market.
“The Philippine response has always been to follow the US lead. The previous administration initiated its own version of a stimulus package and austerity measures. But these failed because of the lack of manufacturing and industrial base and strong domestic market with which to maximize any pump priming activity,” De la Cruz said.
“Austerity measures tend to prioritize big capitalists over labor, the big banks and big corporations over small entrepreneurs. That practice has contributed heavily to the present financial and economic crisis,” he added.
Accroding to him, “President Aquino’s economic program is not comforting to say the least.”
He cited the president’s speech before the Makati Business Club last February, capitalizing on anti-corruption efforts and the focus on what the American Chamber of commerce is rooting – agriculture, business process outsourcing, creative industries, infrastructure, manufacturing, logistics, mining, and tourism; fiscal reforms grounded on a no-new taxes promise.
He said that on its own, the anti-corruption platform will not immediately translate to the reduction of the budget deficit as corruption is deeply ingrained in almost all economic and governmental activities.
On the other hand, he said, “Going after plunderers and big-time grafters will most probably get bogged down in the judiciary system. And if the Marcos and the PCGG experience is any guide, it will take decades before any verdict is handed down, and not necessarily to the interests of justice for the people.”
“The no-new-taxes policy is misguided and just plain political propaganda. The Aquino administration is looking at the more than P300-billion deficit and a P600 billion yearly debt amortization and increasing. Simply removing the estimated P280 billion losses to corruption and plugging it to the fiscal deficit in a year or so will not cut it in the real world,” he added.
NEPA’s president feared that the Aquino administration might just be copying “verbatim” the economic agenda of foreign chambers of commerce and the US chamber of commerce in the Philippines.
“By doing so, the Aquino administration will only be replicating the economic pattern started by his immediate predecessor, and reap the same or worse results,” he said.
De la Cruz said, the BPO industry is “plateauing” due in part to the slowdown of business activity in the US.
“The mining industry is generally limited to the issuance of exploratory permits, and what little practical real-world mining existed is bogged down by serious environmental concerns,” he said.
As to the manufacturing sector, mainly making of electronics chips and car parts, is dependent to the US market.
The thrust in agriculture is not also promising as it focused on high-value crops, and that it cannot escape a serious social challenge as it require vast tracts of land already occupied by farmers.
Also, he said that tourism effort is not any better either. “It is hard to imagine Americans or Europeans doing much traveling to the Philippines these days except maybe for the Koreans,” he said.
Furthermore, he said that the infrastructure program is promising only on paper, unless the Aquino administration defines in detail what projects to prioritize and more importantly, how it will be funded.
He said NEPA proposes economic nationalism because it has been proven right during the only period when the country experienced high economic growth – that is during the ‘50s.
It was clear at the time, he said, “our country managed to build its industry and manufacturing sector and became the second most developed nation in the whole of Asia when it practiced protectionism.”
NEPA proposes the following:
- Increased state investment in and promotion of local manufacturing, more state support for small and medium-size entrepreneurs in the form of increased and relaxed credit windows and technical support;
- Review of export processing charters with the view of putting into place stringent import substitution and technology transfer requirements for locators in various export processing zones in the country;
- Immediate suspension and review of all tariff reduction commitments that had negative impact on agriculture and local manufacturing industries;
- Immediate suspension of the automatic appropriations for debt service, a moratorium on payments to tainted loans public or private loans (with sovereign guarantees) and the implementation of a more rational debt payment mechanisms;
- Government assistance in the promotion and development of nationalist ideals among young entrepreneurs; and
- Creation of a body to formulate a national industrialization strategy.
Seventy-five years ago, NEPA was born out of the historic necessity to hasten the industrial development of the country under colonial powers.
The centuries of Spanish rule and decades of “free trade” under the Americans made the Philippines dependent on the outside world on almost every manufactured commodity—from toothpicks to nails! [see: National Economic Protectionism Association]
The dream of achieving economic independence led to the founding of NEPA in late 1934.
Right after its founding, NEPA launched a nation-wide campaign to promote economic protectionism, which paved the way for “Filipino first, others later” advocacy.
Due to the global economic crisis in the 1960s, the Diosdado Macapagal administration put an end to the “Filipino First” policy. Decontrols, peso devaluation and open-door to foreign investors became the order of the day.
This policy reversal, formulated by the International Monetary Fund and implemented by a rising group of so-called technocrats, was continued in the first term of President Ferdinand E. Marcos.
In the 1970s, the Philippines literally became an open economy—open to foreign capital, foreign loans and foreign economic advisers. Filipino capitalists were relegated to junior partners under the policy of labor-intensive, export-oriented, transnational-dependent industrialization. — LBG, GMANews.TV