To be frank about it, Dutertenomics is lousy in macroeconomic management. Inability to sustain fast growth of 6.5% or higher, inability to control inflation rate below 3%, and inability to control interest rates below 5% for government bonds.
Compared to the ASEAN 6 (excluding Brunei, Cambodia, Laos, Myanmar because they have late and incomplete economic data, smaller economic size), the Philippines is the odd-man-out on three important indicators: reducing inflation rate, raising GDP growth, and reducing interest rates via reducing government borrowings and overspending.
In 2018, world oil prices were high until the first week of October. But ASEAN 6 economies have experienced stable and low, even declining inflation rate (Malaysia and Singapore) — except the Philippines because of the various tax hikes under the TRAIN law, particularly oil tax hike part 1.
Now world oil prices are rising again because of the OPEC + Russia deal of oil output cut by 1.2 million barrels a day from January to June 2019. And Dutertenomics has worsened it by imposing part 2 of oil tax hike this January, part 3 to be implemented in January 2020.
Meanwhile, the UP School of Economics (UPSE) Alumni Association will sponsor a talk on Economic Briefing on Friday, January 25, 6:30 p.m. at Astoria Hotel in Ortigas, Mandaluyong City. Speakers will be NEDA Secretary Ernesto Pernia and DBM Secretary Benjamin Diokno. Both are former UPSE faculty members. It is open to the public, just pay the buffet dinner fee on site.
The two speakers will likely be spewing pat-our-back numbers of good economic prospects. They will likely continue to deny that expensive energy policy via higher taxes is wrong.
And now another team member of Dutertenomics, the Department of Trade and Industry (DTI), has imposed a new inflation-pushing measure, the safeguard duty for imported cement, P8.40 per bag (40 kilos) of imported cement, starting February 8, 2019.
In a BusinessWorld report, “Gov’t imposes cement safeguard duty” (Jan. 18, 2019), it said “he (DTI Sec. Lopez) noted that imported cement surged to more than 3 million metric tons (MT) in 2017 from just 3,558 MT in 2013, while the share of imports by non-manufacturers or ‘pure’ traders increased to 15% from only 0.02% during the same four-year period, he noted.”
Let’s do simple math. This means that the share of local cement producers has increased from 3,558 MT (almost 100% share) in 2013 to 2.55 million MT (85% share of 3 million MT) in 2017. So local cement producers are already happy with bigger sales and revenues, why should DTI penalize the average cement consumers here with higher price?
I saw the position of the Subdivision and Housing Developers Association, Inc. (SHDA) signed by its Chairman Jeffrey Ng and President Raphael Felix. They argued that:
“Stable, consistent and reliable supply of cement is necessary. The imposition of cement safeguards or any uncompetitive non-tariff measure will create supply shortages and result in soaring cement prices, serving only to protect large multinational corporations and, worse, disregarding the general public who will bear the brunt of such actions.”
True. As this column tirelessly argues, consumer interest of cheaper, more reliable products and services (electricity, oil, food, cement,…) should be paramount over other business and bureaucratic interests of higher prices, higher taxes.
Dutertenomics is now known for “expensive is beautiful” policy. Cheap oil and energy is wrong so they made it expensive via higher taxes under TRAIN law. Cheaper cement via more imports (because demand is rising fast) is wrong so government must make it expensive via safeguard duty or tax. Lousy.
Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers.