To do stimulus right you need to have better governance. Obviously the bureaucracy needs to be reformed. The pandemic has brought to fore the neglect of the public healthcare system since former President Ferdinand Marcos was ousted. As it was the trend beginning with the administration of former President Cory Aquino, privatization was the operative word. No tertiary hospitals were built by the government leaving the public at the mercy of health maintenance organisations (HMOs) and private medical centers. This is why Manuel V. Pangilinan’s MVP Group is now the largest player in the private healthcare industry with the hospitals they acquired nationwide. The Philippine Orthopaedic Hospital and the Jose Reyes Memorial Hospital were almost privatized during the Aquino administration. It was fortunate that it didn’t push through.
Snake oil salesmen Rappler economists have been pushing for more fiscal stimulus. But what happens after the money has been spent? Nothing. The Department of Finance and the NEDA has decided that the pump-priming of the economy will be done through the Build Build Build (BBB) program. More infrastructure projects. The Finance Secretary has indicated that he is now open to Public-Private Partnerships. Why? Employment is better than handing out cash to the poor. But the government should also address the undercapacity in the public healthcare system. There are regions where hospitals are classified only at the infirmary level. Patients requiring specialized medical attention have to be transferred to the regional hospitals.
In his Inquirer column today, “Doing stimulus right”, Cielito Habito writes…
So how did we actually use our economic stimulus funds in the past year? The Department of Labor and Employment first rolled out assistance supposedly good for 600,000 workers in the first tranche, then for another 800,000 in the second tranche. The Department of Finance followed with a wage subsidy program for 3 million workers. But with a labor force of about 42 million workers, all this was a mere pittance. The Social Amelioration Program (“ayuda”) from the Department of Social Welfare and Development reportedly reached some 18 million families, so was more comprehensive in coverage—although it far from replaced actual incomes lost by most recipient families. But unless purchasing power is restored near pre-pandemic levels, firms find little urge to borrow money to resume business operations at usual levels. Worse, their cost of doing business has risen with the additional expenses required to deal with COVID-19, from rubbing alcohol to COVID-19 tests for employees, not to mention traditional hurdles that tax and regulatory authorities throw in their way.
The reality is, case surges in Covid are going to become common occurrence. The government needs to prepare for this contingency. Preparation is a better stimulus than handouts as it ensures the well-being of the labor force which is an essential component of economic recovery. Lending to SMSEs should also be improved. The DTI keeps citing lending statistics but the effectiveness of their efforts aren’t quantified. Digitization of the bureaucracy should also be a priority in order to finally curb corruption. Blockchain is secure and transparent. The BSP should look at issuing its own e-Peso. China has begun implementation of the e-RMB. Fintech must be adopted by the government. The cost/benefit is for it because it results in less cost of printing currency and minting coinage. There is already a plethora of digital wallets available. China’s technology makes use of a phone number and works on 2G devices.
The government has its work cut out for it. If only it would do its job and get rid of the incompetents and unqualified then it would be more productive and efficient.