Yellow Pad

As 2017 draws to a close, and even before we celebrate Christmas, the country is bracing itself for an upheaval.

Consider the following major developments:

1. The Supreme Court Chief Justice Maria Lourdes Sereno is being impeached. Notwithstanding the word of President Rodrigo Duterte that he is not behind the impeachment, his cold-blooded executioners like Pantaleon Alvarez and fumbling subalterns like lawyer Lorenzo Gadon are performing the services for Duterte. Never mind that the grounds for impeachment are hollow.

2. Mr. Duterte threatens to install a revolutionary government. He said that the predicate of his revolutionary government is when the “country is weakened and I see revolutionaries bringing firearms on the streets.” Why a revolutionary government, and not martial law? Duterte’s reply: Martial law has “many restrictions.”

However, the day after his threat of imposing a revolutionary government, Duterte backtracked and assured the public that having a revolutionary government is “far-fetched,” that people should dismiss the talk about a “revolutionary coup d’etat.” Meantime, his followers are organizing a demonstration on Andres Bonifacio Day to call for a revolutionary government.

3. The first package of the comprehensive tax reform, also known as the Tax Reform for Acceleration and Inclusion (TRAIN), is on the cusp of becoming a law. The TRAIN is a litmus test of the Duterte administration’s ability to pass a hard reform. The Senate is deliberating on the TRAIN for approval. It is expected that the President will sign it into law by the end of the year.

The version passed by the Ways and Means Committee chaired by Senator Juan Edgardo Angara is diluted. The structural weaknesses remain, especially on the retention of the value-added tax (VAT) exemption or VAT zero-rating for major items. The revenue that the Angara version can generate is estimated at less than half of the P130 billion that can be obtained from the bill passed by the House of Representatives. Anemic revenue collection from TRAIN means that the government will not be able to deliver its promised higher spending for infrastructure, education and health.

4. The most recent news is the directive of President Duterte addressed to the National Economic and Development Authority to undertake the immediate steps to relax the limits on “investment areas or activities with limited foreign participation.” The lifting of restrictions covers public services or public utility, among others. Congress has to pass the necessary laws to remove or ease the restrictions.

5. Amid all this, the economy has maintained its high growth. For the third quarter of 2017, Gross Domestic Product grew by 6.9%. To be sure, the economy is poised for sustained higher growth, once the government secures the critical changes like TRAIN and investment liberalization.

But the current as well as the potential economic gains can suffer reversal. The unpredictability and absurdity of the politics obstruct the momentum. The economy should have performed better if not for Duterte’s politics.

We cannot rule out destabilization. But what is destabilizing has nothing to do with the derring-do if not the rashness of Senator Antonio Trillanes or the firm opposition of the Liberal Party.

Solid and consistent opposition? Well, the stalwarts of the opposition like Senator Benigno Aquino IV and Senator Franklin Drilon cooperate with the ruling coalition in the Senate in voting for questionable legislation like the free college education for all and lately, the more insidious VAT zero rating for the suppliers to economic zones and freeports. Free college education for all is inequitable. It is a bad type of populism. The VAT zero rating for indirect exporters and suppliers to economic zones evidently caters to vested interests.

The destabilization comes from the Duterte administration itself. In particular, the two political actions described above — the attempt to impeach Chief Justice Sereno (as well as the threat to impeach the Ombudsman Conchita Carpio-Morales) and the liking for a revolutionary government — will upset investor sentiments and undermine the economic gains. Moreover, they set the stage for intensified political polarization.

In the short term, the obsession to consolidate power by impeaching the Supreme Court Chief Justice and possibly the Ombudsman and to create a revolutionary government will distract the policy makers and the public from tackling the key reforms. Congress and Malacañang will waste their time in political theatrics. Reforms take a backseat. The growth momentum decelerates.

In the long term, this creates irreparable damage to our democratic institutions. As economists and social scientists say, institutions matter for long-lasting development. But institutions matter not only for economic performance. Institutions are the bedrock of a highly cohesive and secure modern society.

Yet, the damage to institutions and to the Duterte administration itself is self-inflicted. The impeachment of the Supreme Court Chief Justice is blatantly baseless. Even the loyal lieutenants of Mr. Duterte in Congress cannot defend the impeachment complaints against the Chief Justice. The House is having qualms about the success of the impeachment in the face of the credibility and incongruity of the complaints. The Senate, which is most sensitive to public opinion, will reject it.

The idea of the revolutionary government is as silly as the impeachment project. Declaring a revolutionary government simply means that Mr. Duterte will overthrow himself as the constitutionally mandated President. He thus creates an extra-constitutional or illegal government for himself. But the constitutional government exists, de facto and de jure.

The Filipino people, despite being satisfied with Mr, Duterte’s performance, believe in institutions. The people will follow the Constitution. So will the Armed Forces of the Philippines. And the community of nations will respect the rule of law and reject the arbitrary wish of one and his trolls.

Mr. Duterte is a rational person in spite of his mad rhetoric. He knows that he would lose big time if he would allow the theatrics to become a monstrous reality.

But because he draws pleasure in playing high-risk games and because his followers are blind and rabid, we cannot be complacent.

Upheaval, for better or for worse, is indeed the sign of the times.


Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.