fajardo the case for re-balancing philippine regional development (revised)
TRANSCRIPT
The Case for Re-balancing
Philippine Regional Development
Perry Fajardo
February 28, 2014
Cebu City Philippines
A reaction to the presentation of Dr. Arsenio M. Balisacan
Socioeconomic Planning Secretary & Director General
National Economic & Development Authority
on the Performance of the Philippine Economy
By: Fernando C. Fajardo “Perry” February 28, 2014, 1:00–5:00 P.M.
City Sport Club, Cebu Business Park
Cebu City, Philippines
Despite the recent improved
performance of the economy, the
Philippines still suffer from lack of jobs
and high incidence of poverty
Why?
I maintain that this is due in
large part to failure to create more growth
points and disperse development away
from Metro Manila.
Some historical events affecting Philippine regional
development :
Spanish Mercantile Policy The galleon trade (monopoly between Manila and Mexico) brought very little
benefit to the countryside. Most goods loaded from Manila came from China with most of the proceeds (gold/silver coins) from Mexico also ending up in China.
Globalization Policy Part I The first era of globalization came in the 19th century which ended with WWI.
The galleon trade monopoly ended when Spain lost Mexico in early 19th century which forced the Spaniards to open the country to global trade.
In addition to Manila, the ports of Sual, Iloilo and Cebu were then opened to foreign trading vessels.
The opening started the first real countryside development of the Philippines when wide tracts of land were planted to sugar, abaca, coconut, and other products for export along with forestry and mining.
The opening brought in cash to the people of the different regions away from Metro Manila although much of that still ended up in the hands of local Chinese traders which monopolized Philippine business.
Land Settlements Policy This was to disperse the population by opening up new lands for agriculture
development and human settlements in the North (Cagayan Valley) and the South (Mindanao).
Post-War Economic Policies affecting the regions
Import substitution & Protection of Domestic Industries This resulted in concentrated development in Metro Manila where the market was
large, where imported machineries and inputs were landed, and where high government officials could be easily reached by investors to get protection and other favors for their business. The regions were left out.
Masicap An attempt to promote entrepreneurship and develop medium and small scale
industries in the countryside beyond the level of cottage industries. Potential entrepreneurs were identified, given training and assisted in finding new markets but financing was the problem. Most banks gave loan based mainly on collaterals being pledged, not on the soundness of business plans.
Export Processing Zones This produced the Bataan, Mactan, Cavite and Baguio Export Processing Zones but
the rest that followed came only in the last decade or two which now included special economic zones (SEZs) and IT Parks/Buildings but mostly located in Metro Manila.
Industrial Estate Development One product of this program is the Phividec Industrial Estate in Misamis Oriental in
Mindanao but nothing more significant followed.
Regional/Local Development Authorities This was in response to the clamour of local politicians to show something for their
constituents. Almost every big island or province had one but too many of them means little funding for each. Most were just paper authorities.
Martial Law Effort to Promote
Regional Development Presidential Decree No. I approved the
implementation of the Integrated Reorganization Plan (IRP) of the executive branch of the government. The IRP transform the National Economic Council into the
National Economic and Development Authority and placed all the existing regional and local development authorities under its power.
Part VII of the IRP aims to promote regional development through planning and coordination of development in the different regions of the country.
The IRP called for the creation of Regional Development Councils (RDCs) in each region to serve as its super planning body and spearhead its development.
The regional offices of NEDA serves as the technical arm of the RDC in each region.
The RDCs were
fully in place by mid 1970s.
How effective was the RDC
system in bringing about
progress to the different
regions outside of
Metro Manila?
Region Land Area
(Percent)
1975
Population
(Percent)
1975 GRDP
(Percent)
Per Capita
GRDP Ratio
(Region /
Philippines)
PHILIPPINES 100 100 100 1.00
Luzon 47.13 54.17 64.19 1.19
NCR 0.21 11.81 31.60 2.67
Region III 6.08 10.01 8.32 0.83
Region IV 15.64 12.39 14.03 1.13
Visayas 18.86 24.09 18.88 0.78
Region VI 6.74 9.86 9.34 0.95
Region VII 4.98 8.05 6.80 0.84
Region VIII 7.14 6.18 2.74 0.44
Mindanao 34.00 21.74 16.93 0.78
Spatial Development Imbalance in 1975: Metro Manila or the National Capital Region (NCR) had less than 1% of land and
11.8% of population but had 31.6% of the gross regional domestic product
(GRDP) and per capita GRDP which was 2.67 bigger than the national average.
Look how poorly the Visayas and Mindanao fared.
Region 1975 GRDP (In Percent)
2012 GRDP (In Percent)
1975 Per Capita GRDP Ratio (Region/Phil)
2012 Per Capita GRDP Ratio (Region/ Phil)
PHILIPPINES 100 100 1.00 1.00
Luzon 64.19 72.8 1.19
NCR 31.60 35.7 2.67 2.79
Region III 8.32 9.2 0.83 0.84
Region IV 14.03 19.1 1.13
IV-A 17.4 1.25
IV-B 1.7 0.58
Visayas 18.88 12.7 0.78 0.66
Region VI 9.34 4.1 0.95 0.54
Region VII 6.80 6.3 0.84 0.86
Region VIII 2.74 2.3 0.44 0.52
Mindanao 16.93 14.4 0.78 0.61
Regional development imbalance got worse over time: In 2012 ,the NCR had 35.7% of the GRDP and per capita GRDP 2.79 times bigger than
the national average. From 14% and 8.3 % respectively, Region IV (Southern Tagalog)
now had 19.1 and Region III (Central Luzon) 9.2% of the GRDP but that was all about
dispersing development. The situations in Visayas and Mindanao got worse
Poverty incidence is very high in regions away from the NCR.
Below is the extent of poverty (in %) by region based on population. COUNTRY/REGION 2006 2009 2012
PHILIPPINES 26.6 26.3 25.2
ARMM 47.1 47.4 55.8
REG VIII 41.5 42.6 45.2
REG X1I 37.9 38.3 44.7
REG IX 45.0 45.8 40.1
REG V 44.2 44.2 41.1
CARAGA 49.2 54.4 40.3
REG X 39.0 40.1 39.5
REG IV-B 40.6 34.5 31.0
REG XI 30.6 31.4 30.7
REG VII 35.9 31.0 30.2
REG VI 29.1 30.8 29.1
CAR 26.0 25.1 22.8
REG II 26.8 25.5 22.1
REG I 25.9 22.0 18.5
REG III 13.1 13.7 12.9
REG IV-A 10.3 11.9 10.9
NCR 4.7 3.6 3.9
This poverty incidence map by province clearly shows that areas far from Metro Manila or the National Capital Region got the short end of whatever little progress the Philippines achieved since the last war.
To reduce poverty, regional development
imbalance must be corrected
This needs the immediate review of Philippine regional development policies such as the RDC system
With the RDC, why did the spatial development imbalance persisted or got worse?
What is wrong with the RDC system? Should it be given a separate budget to implement its plan instead of just endorsing their projects to Manila for inclusion in the budget of the different national government agencies which also have their own priorities?
What of the integrated area development projects which cut across sectors within the region?
To reduce poverty, the local government
code must also be revisited Much of what happens in the region is also
explained by what is done by the local government units (LGUs) Based on the 1991 Local Government Code, 40% of BIR collection
(three years before the budget year) are given to the LGUs.
Known as Internal Revenue Allotment (IRA), this amounts to P274.5 B this year (2014) which represents 63.8 % of all LGU Resources
What has happened to the large sum of IRA that went to the LGUs since 1992?
Why are many LGUs still devoid of any sign of progress?
And why are LGUs still greatly dependent on the IRA despite the power given to them to generate more local resources by the 1991 Local Government Code?
Is it not time to review also the effectiveness of the 1991 Local Government Code?
To reduce poverty, infrastructure
development must also be pursued in the
regions away from Metro Manila
What about the Private Public Partnership which aims to improve the country’s infrastructure? How much of the projects listed and now implemented
under the PPP go to the regions outside the NCR, Calabarzon and Central Luzon?
Do we have a policy of directing them to the Visayas and MIndanao?
If not, how are we to make them competitive in attracting private investments?
Without investments, jobs will be scarce in the regions and poverty will be high.
The imbalance in the spatial development of the country will remain or continue to get worse in favor of Metro Manila along with Central Luzon and Calabarzon.
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