IBON: PDP 2023-2028 non-solution to PH economic crisis

January 30, 2023

by IBON Foundation

Research group IBON said that the Marcos Jr administration’s Philippine Development Plan (PDP) 2023-2028 boldly promises “economic and social transformation for a prosperous, inclusive and resilient society” yet falls short as a comprehensive development plan. The group said that the PDP 2023-2028 is an obsolescent plan that needs to be reversed to pursue an economy that benefits the many.

The PDP 2023-2028 forum on Monday features cabinet secretaries and representatives from the private sector and civil society who will tackle their respective programs for economic and social transformation. The government has constantly built up the PDP as the driver of progress.

The current plan is the ninth development plan since the Marcos dictatorship’s PDP 1978-1982 which pushed free market reforms as “structural adjustment” while orienting the economy towards exports and attracting foreign investment. All the development plans since then have had the same framework and have been successful in making the country more export-oriented and in attracting foreign investment.

Measured as share of gross domestic product (GDP), exports increased from around 16% of GDP in the early 1980s to over 40% in the early 2000s, albeit moderating to 28% in the last five years. Foreign investment has meanwhile in effect increased six-fold from inward stock equivalent to less than 5% of GDP in the early 1980s to 29% today.

Yet, IBON stressed, the share of manufacturing has fallen to its smallest share of GDP since the 1950s, and of agriculture to its smallest in history. Their respective shares in employment are also down to their smallest in recorded history.

IBON cited a number of reasons why the most recent PDP will not deliver more, better and green jobs, nor drive progress.

Firstly, said the group, the PDP sticks to the same old neoliberal framework of the previous eight PDPs which is the biggest reason for the long-term decline of agriculture and industry. These past four-and-a-half (4 ½) decades of globalization policies have made a few prosperous but also caused chronic joblessness, poverty and underdevelopment. Social services and social protection have also been deprioritized to free up public resources for private investors.

Secondly, the PDP has no ambition to boost the country’s production sectors. This is indicated, said the group, by government’s 2.6% middle target growth for the agricultural sector which is only incrementally higher than the annual average of 2.3% that has already been achieved over the past 20 years. There are also no targets for building domestic industrialization such as towards forging Filipino manufacturing. The old Marcos-era PDP 1978-1982 had at least targeted manufacturing to grow to over 25% of GDP in the first few years of the plan. Likewise, there are no environmental indicators for ensuring sustainable production, said IBON.

Thirdly, while frequently mentioning equity and inclusion, there are no specific targets regarding improving the distribution of income and wealth. For example, direct measures include  ensuring a family living wage and stopping exploitative landlords and traders from depressing rural incomes. Indirect measures include raising revenues through progressive taxation to finance greatly expanded social services as well as social protection, said IBON.

The PDP’s stubborn insistence on trade and investment liberalization is anachronistic and misguided, said IBON. The group hit the plan’s excessive and unfounded optimism about so-called free market forces, which it said are inherently exclusionary and biased for the holders of income, wealth and capital.

The group also said that the PDP mirrors government’s reluctance to be a competent, responsible and democratic state fulfilling its critical role in producing equitable social and economic development. It continues to rely on external sources of growth, mainly foreign investments, even despite proof that these are not the key to development. Foreign direct investments (FDI) flow has significantly increased in the Philippines in the past decade, yet most Filipinos have remained poor and with little or no savings amid joblessness, while the economy has barely stood on its own with very weak agriculture and scant Filipino industries.

To stress that more FDI does not guarantee development, IBON cited that Philippine foreign investments today even exceed how much South Korea, Taiwan and China had at the peak of their respective periods of economic take-off in the mid-1980s. Yet the Philippines is today among the most laggard nations in the region with, for instance, the fourth smallest manufacturing sector.

IBON added that the Philippine economic managers’ obsession with economic liberalization is passé given that the country’s most important trade and investment partners including US, China, Japan and the European Union are among economic powers that have been turning to protectionism amid the continued slackening of the global economy.

The PDP is underpinned by an out-of-date free market globalization framework, said IBON, which is the very same approach that kept the Philippine economy persistently underdeveloped for the past decades. Changing global conditions of dampening exports and investments only point to the urgency of much more domestic-led and democratic development, said the group.