BANANACUE
REPUBLIC
Vol II, No. 01
Jan 05, 2005

 
 
 by Daphne Cardillo

ARCHIVE #002

TABLE OF CONTENTS 

Archive:
2004
2005

NIChood

Over a decade ago, some economists and government planners were considering the possibility of our country's joining the ranks of the newly-industrializing countries (NICs) before the end of the century.  A few indicators were cited like per capita income and per capita growth rate, population growth, and factor productivity as some measures for economic growth.  However, we are already at the beginning of the new century and recent economic indicators prove otherwise.  We are on the brink of deep recession and widespread unemployment resulting from the government's inability to service its loans.  The national government's total debt was observed to stand at P3.4 trillion as of the end of 2004, an equivalent to 78 percent of the GDP (int'l standard sets 70 percent as the safe limit).  In any event, the government may be forced to default on its loans and thereby cut off the inflow of foreign and domestic capital.

But even without this debt crisis, the industrialization program laid down during the Marcos years are not being sustained.  A huge amount of borrowed capital were invested in the construction of major industrial plants but a few have become unoperational while others are up for sale.  I doubt if there is a return of investment at break-even point after all those debt servicing.

Simply focusing on the manufacturing sector which is the trademark of an industrializing state, the Philippine experience still lags behind with its few Asian neighbors.  The industries created were heavily dependent on imported inputs and failed to develop forward and backward linkages with the other local industries in the country.  As a consequence, it has to export its finished products like copper thus competing in the world market which can only be at a disadvantage.  Comparatively.  In addition to this, a lot of by-products are simply laid down to waste, unutilized due to the absence of another type of processing infrastructure, and not even properly disposed thereby exposing the environment of their toxic elements.

A few of those manufacturing plants that are processing products in their rawest forms are not also following standard safety measures thereby endangering the environment.  News would erupt every now and then of lakes and bodies of water being polluted to poisonous levels, not to mention of forests cleared and denuded in the first place.  In Leyte alone, we had reports of acid rain experienced by some people in their localities which is situated near an industrial estate.  Finally, the remaining export-processing zones that were protected industries during the martial law years still remain at the "cottage industry" level.  Except that they are producing goods en masse, like textiles.  Timex, the timepiece that have on its label "Philippines" is not totally manufactured here.  What we have at the Mactan Export Processing zone is only an assembly point, the last stage of production whereby spare parts  are assembled after which the finished products are being ready for the market.

There is still a lot of groundwork to be laid for industrialization to be realized even at local and micro level.  Communication lines, transportation lanes like airports and docks that could accommodate cargoes for materials, abundant water supply, concrete roads, among others.  Plus sufficient and stable power supply.  But the most important factor still is, capital.  But with the looming debt crisis and prevailing interest rates, who would bring in the capital.

Maybe we have not pursued the right way towards industrialization.  The government has taken the way towards export-orientation.  Maybe there is a need to gear towards production for our own domestic consumption.  That would create a new balance--the right balance.

Posted 01/05/05.  Send your comment to bananacue_republic@yahoo.com
 

"We are on the brink of deep recession and widespread unemployment resulting from the government's inability to service its loans.  The national government's total debt was observed to stand at P3.4 trillion as of the end of 2004, an equivalent to 78 percent of the GDP"