Missed the bus again

Glowing claims that the Philippines is an economic pacesetter in the region and in some accounts, a global growth leader have been exposed as deceptive, as the country remains a laggard among its peers.

The World Bank classifies the Philippines as a lower-middle-income country, but the latest figures showed Vietnam has surpassed it in terms of per capita gross national income (GNI), at $4,470 against $4,490, respectively.

The World Bank’s revised upper-middle-income threshold is set at $4,496 to $13,935 to be classified as an upper-middle-income economy.

Thus, the Philippines is the last among the five founding members of the Association of Southeast Asian Nations (ASEAN) to be in the lower-middle income category.

Indonesia has a GNI per capita of $4,910; Thailand has $7,120; and Malaysia has $11,670, putting them all in the upper-middle income level.

Singapore, of course, has long been a high-income economy with a GNI per capita of $74,750, along with Brunei Darussalam with $36,150.

The irony of it all is that the Philippines is rich in natural resources compared to its wealthier neighbors.

Just recently, a scandal rocked the yearly budget process, which was an indication of the recurring scourge that keeps the country from reaching its full potential.

The national budget, or the yearly General Appropriations Act (GAA), is often subject to manipulation through discretionary insertions and pork barrel schemes.

While corruption is not exclusive to the Philippines, the stunted development of the country reflects the extent of the damage the problem has caused.

The ballooning of items called unprogrammed appropriations (UA) in the budget indicated that funds intended for critical projects such as infrastructure, health and education were being diverted to the pork barrel.

The Priority Development Assistance Fund (PDAF), a pork barrel, was ruled unconstitutional in 2013 after revelations of widespread misuse. Discretionary funds persisted thereafter under different names, taking the form primarily of “congressional insertions,” which prioritized local projects that benefited political allies over national development goals.

Corruption in the budget execution delays or inflates the cost of infrastructure projects, a critical factor for the economic lag.

In the 2018 budget impasse between the House and the Senate over alleged insertions, the GAA’s approval was delayed by months, stalling infrastructure projects.

A sector that is always waylaid by the irregularities is the education sector, which is critical for human capital investment.

The Philippines spends about 3.4 percent of its economic output on education, below the United Nations Educational, Scientific and Cultural Organization’s (Unesco) recommended four to six percent.

The Commission on Audit had cautioned the Department of Education about the P2.4 billion in questionable laptop procurement deals.

The investigation into the purchases caused delays in the digital education programs, a typical hurdle that exacerbates the poor human capital development.

Weak enforcement of anti-corruption laws and slow judicial processes make the country a haven for corruption.

In comparison, Singapore’s stringent anti-corruption framework and transparent budgeting underpinned its economic success.

Vietnam has used disciplined budgeting to fund export-oriented policies, which catapulted it past the Philippines in terms of economic growth.

The misallocation of funds perpetuates low productivity, deters investments, and eventually is a key factor for the country continually missing the opportunity to develop.

The endemic corruption plaguing the government has stalled the economy in a region of progress, a familiar affliction that has returned with full force.