Press Release
July 24, 2006


All Economy, No Governance

As a lawyer and political scientist, I respectfully submit that the speech is lopsided. First, it is all economy and virtually no governance. Second, its focus is on urban, and hardly on rural areas.

I would have wanted a pronouncement on voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption. These are the come-ons of foreign investment. The level of direct foreign investment is directly proportional to the quality of governance. To concentrate on the economy without mentioning governance is a skewed order of priorities.

The speech is like a first-time Sona, instead of a midterm Sona. It is a list of promises on large-scale infrastructure projects, but it does not quantify the cost of all these projects. What will be the nature of the funding foreign or domestic; and public sector or private sector?

I am skeptical, because in the last five years, infrastructure spending as a share of GDP has steadily declined. I do not see any guarantee that this trend can be reversed. The speech provides no motivation for private sector investors to get involved in the provision of public infrastructure. The speech does not mention the NAIA 3 fiasco, and what government will do to resolve it. Insofar as foreign investment is concerned, the festering problem of NAIA 3 is an albatross around the neck, and until it is resolved, direct foreign investment in our country will remain insignificant.

In my humble opinion, government should focus on labor-intensive rural infrastructure, and not on large-scale urban infrastructure.

Number Crunchers on Employment are Misleading

It is true that in 2005, the economy generated 750,000 new jobs, but the number crunchers failed to add that the new jobs were not enough for the one million new entrants to the labor force.

It is true that 750,000 new jobs were generated, but the quality of jobs has deteriorated. More than half of new jobs went to unpaid family workers, mostly in the agricultural sector; and the rest went to the self-employed in the underground economy.

Of the 750,000 new jobs, most are informal employment. This means that the number of those who are formally employed (meaning wage and salary workers) is shrinking.

Further, more than one-third of the employed workers last year were only part-timers.

Dont Bash Imperial Manila

Why should imperial Manila be an object of opprobrium instead of economic concern? It has its own social and economic problems. Metro Manila has the highest unemployment rate of 15 percent, about twice the national average.

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