Message at the Asian Legal Business Philippine Corporate Compliance Forum
New World Hotel, Makati City
Thank you very much.
Ms. Tess Veloso; Ms. Lisa Contreras; delegates of the ALB Philippine Corporate Compliance Forum 2019; honored guests; ladies and gentlemen: Magandang umaga po sa inyong lahat!
The last few years have been marked by major regulatory changes, from a more efficient income tax system to a more modern Corporation Code to the Philippine Competition Act to the repeal of the outdated Cabotage Law, among others. Today is a great time to take stock of all of these and analyze where they will take our organizations, our economy, and most importantly, our people. For although it is important to build with extreme care the economic roads and highways that will bring our country the prosperity it craves, we must never forget that the point of all our hustling and bustling is to create an equitable and comfortable life for all, not just a few.
And that is the reason why I am excited to speak before you today. The Philippine economy has lost a little of its momentum, but it is still growing and it is still ripe with potential. I believe that it is inclusivity that will help us pick up our stride once again, and sustain it until we achieve First World status in a way that will make the world sit up and take notice.
You see, until today, many of the world’s greatest economies have achieved power on the back of inequality. Industries across the globe have grown massively at the expense of factory workers being denied both fair wages and decent working conditions, and at a heavy cost to our environment that has put the future of our children at stake. Sectors like agriculture, manufacturing, and even technology have been skewed to a certain extent towards those who are already rich. Financial markets are no different. No wonder there is a growing cry of frustration across the world, as the bottom poor are finding their voice through social media and the internet, questioning democracy and the fairness of markets.
Somehow, however, regulation and governance are catching up. We are seeing moves to make the world a better place by giving the ordinary Filipino some protection in terms of laws and regulatory structures. This is why your roles are critical to our economic growth. You are the conscience of the business community. You ensure that business is done fairly, so that wealth is equitably spread not just based on the size of capital, but also based on the strength of effort and skill. When compliance and legal officers do their jobs well and with integrity, our economy will do better.
As it is, I compare our economy to a beautiful bride about to walk down the aisle. There is expectation of a wonderful future up ahead, but there is also some worry and a little bit of fear.
The Philippine gross domestic product growth rate has continued to decline from 6.88% in 2016 to 6.24% in 2018. This year, the consensus is that government will again miss its targets due to the delayed passage of the government’s budget in the beginning of the year and the weakness of the export sector. Even if the government attempts to catch up on fiscal spending and despite the planned triple-R and interest rate cuts of the Bangko Sentral, we will have a very hard time hitting the 7% to 8% government target for the year. At this rate, our 6.2% GDP in 2018 does not look too well beside some of our neighbors’. In 2018, Cambodia’s GDP clocked in at 7.3%, China at 6.6%, and Vietnam at 7.1%. We were, however, growing much faster than Thailand’s 4.1%, Singapore’s 3.2%, Malaysia’s 4.7%, South Korea’s 2.7%, Hong Kong’s 3%, and Indonesia’s 5.2%.
On a good note, we have recovered from the punishingly high inflation rates of last year due largely to the stabilization of rice prices following the passage of the rice tarrification law, lower world oil prices, and the central bank’s monetary response during that time. July’s inflation rate eased to 2.4%. Taxpayers have enjoyed big breaks after the TRAIN law reduced income taxes, many families with college-age children are expected to receive some relief because of the increased coverage of Republic Act 10931 or the Universal Access to Quality Tertiary Education Act, and poor families are also expected to obtain a much-needed boost in financial stability with the recent institutionalization of the cash transfer program. The government has also increased salaries, old-age pensions, and health insurance. It hopes to raise more money through the next round of TRAIN measures to finance these higher spending requirements.
Investment has risen as a percentage of GDP, thanks to the business sector’s resiliency and appetite for growth, but the efficiency of each unit of investment is declining. Foreign direct investments have continually dropped from 2017 to the first quarter of 2019.
Given all these, and while the future looks bright because the demographic dividend and the growing middle class indicate an upward economic trajectory for our economy, our economy still faces several major risks. We have declining export competitiveness, a growing trade and current account deficit, chronically low agriculture growth, threats to constitutional order, and possible global recession due to the trade war between the U.S. and China. Within this environment, it is critical that government fulfills its role of creating a level playing field and a conducive environment that will allow businesses to flourish. But at the same time, safeguards should also be in place to ensure inclusivity.
More than all of these, I find the issue of poverty a more pressing concern. Real wages have remained flat since 1998, despite rising GDP and productivity growth. In the agriculture sector, most especially, our people are suffering. While the economy grows, a significant portion of the Filipino population is likely to be left behind. And this is a problem that is felt every day, in every kitchen in every home among the poorest 30% of our people, in every classroom in remote communities, in every factory where laborers toil, and in every crowded bus or train as our people ride home daily from their commute. This is the problem that cannot be ignored, because poverty and hunger claim lives—not just dreams—every single day.
The official poverty incidence has gone down to 21% in the first half of 2018, from 27.9% in the first semester of 2012. But unless we fix structural problems in sectors like agriculture, until we address the tremendously high stunting rate of 33% of our children, if we do not improve our educational system, and harness our business potential by truly improving what we call the ease of doing business, our people will fall through the cracks and inclusivity will become a pipe dream. Growth will be empty if it is growth only for those who have been lucky in the ovarian lottery. We must not just grow the economic pie; we need to ensure more are able to benefit from it by focusing on addressing poverty and promoting inclusivity.
At the Office of the Vice President, we do not have much funds and resources. We have one of the lowest budgets in the whole bureaucracy. But we have waged a war, not with bullets nor with guns, but with partnerships and collaboration with the private sector and development organizations, so that the poor and the marginalized will not be left behind by progress. We call our program against poverty “Angat Buhay,” which literally means to uplift lives.
One of our Angat Buhay projects is called Omasenso sa Kabuhayan, and it aims to address inclusivity head-on, beginning with small farmers in Camarines Sur. You see, for decades, many of our farmers have been at the mercy of middlemen who have taken advantage of the lack of sufficient infrastructure granting access to markets to buy palay at low prices. They would get up as early as three in the morning and labor all day, only to earn too little from their sweat and toil. They have the grit and determination to expand their businesses, but without the skills and networks to reach bigger markets and get their products out there, they fight a losing battle. No wonder our young people do not want to become farmers anymore.
So with the help of our partners, we worked together to upgrade the skills and empower our local farmers through training and workshops. We turned them into entrepreneurs. The Central Bicol State University of Agriculture provided technical support, research and technological innovations. What better way to ensure the success of our farmers than to expose them to the best thought leaders in the field. The Metro Naga Development Council took care of data gathering and establishing the baselines, as well as monitoring and evaluation, so that every policy is evidence-based and effective. Even the Department of Agriculture Regional Field Office and the Department of Agrarian Reform were very hands-on with technical assistance, augmentation of farming equipment, inputs and supplies, and shared service facilities like modern rice mills. The Department of Trade and Industry Provincial Office in Camarines Sur helped in the farmers’ transformation into entrepreneurs. Through the DTI Mentor Me program, the farmers learned about marketing and product development.
Big business, of course, stepped in in a major way. The Metro Naga Chamber of Commerce and Industry encouraged their members in the food service and tourism industry to already source their products from our local farmers. They provided opportunities for the small farmers to directly interact with institutional buyers through events like the Bicol Business Month. As you can see, nothing can stop progress when everybody works together.
As a result, our farmers are already reaping the benefits of these new partnerships in a major way. Our 11 farmer associations have already started supplying vegetables to several well-known establishments in Naga like Biggs, a big fast-food chain in the Bicol region. If you happen to visit the area and eat there, the vegetables you eat will hopefully be from Omasenso farmers. And we are quite proud of that.
The transformations have been very touching, and one of them is a beautiful development we never saw coming. One of our Omasenso farmers, Tatay Robert Buayaban, has emerged as a really effective leader. He said that through the help of the 8-Step Clustering Approach Training, the farmers have learned how to organize themselves and gain additional knowledge on managing their produce. They now know how to prevent losses. And when they have surpluses, they have learned how to create products from their excess produce that they can sell to institutional buyers.
All Omasenso sa Kabuhayan Farmers are now trained to identify the demands of the market. These are the new breed of farmers that we wish to see all over the country: empowered, skilled, well-connected, and full of business sense.
We could only hope that programs like this continue to grow. What a tragedy that those who produce our food are the ones who are most hungry and have nothing to feed their families, when there is nothing that can stop us from elevating farming as an economically rewarding business. If we can invite and include more organizations into the fold, we will be able to reach out to more of the last, the least, and the lost of our people, especially those in far-flung areas where development and success continue to be a dream.
Each one of you can make this happen. Each one of you can be the source of empowerment and economic growth. Each one of you can make a lot of difference in the way our people in the margins live. All we have to do is shift the way we do business and shine a light on the warmth of inclusivity, not just on hard, cold profit.
I would love to take these conversations with you a little bit further. Let us work together; let us change our country together. Our bride does not have to be disappointed; she can enjoy a bright future where economic justice and economic freedom are enjoyed by a nation that is growing and progressing the way it should.
So thank you for all that you do for our country. Mabuhay po kayong lahat! [applause]