There is a strong case to make on behalf of industrial policy in developing countries like the Philippines. This is the central message of a roundtable discussion on Industrial Policy held July 31, 2011, with respected Filipino economist Dr. Manuel “Butch” Montes as main speaker.
Philippine government has ditched industrial policy supposedly because of its susceptibility to corruption and rent seeking, but according to Dr. Montes, even governments that have adopted trade liberalization measures are now implementing “non-purposive industrial policy interventions because of private sector pressures and market imperfections.” Put simply, Montes said that rent seeking happens even in the most liberalized economies and governments’ investment decisions are a result of industrial lobbies and the balancing of many interests.
Montes was formerly with the UP School of Economics and is the current Chief of Policy Analysis and Development Branch of the Financing for Development Office of the United Nations Department of Economic and Social Affairs (UNDESA). The RTD was organized by various Philippine advocacy organizations and progressive think tanks to initiate a process of discussion, consensus building and advocacy around a Philippine industrial policy. This is to counterbalance the P-Noy government’s economic policies of private-public partnerships, patterned after previous build-operate-transfer schemes, and of continuing trade liberalization.
“Industrial policy is all about new technology that can be scaled up and where a country can be competitive,” said Dr. Montes. He said that industrial policy can capitalize on technological innovations to promote the development of specific industries with competitive advantage within their boundaries. He debunked old economist thinking that government interventions ward off foreign investors and cited the cases of China and Korea which adopted an industrial policy that focused on promoting green industries and used trade interventions and export orientation to develop their target industries.
One area for industrial policy Montes discussed is green technologies, which is the subject of the 2011 World Economic and Social Survey UNDESA recently launched.
The industrial policy Dr. Montes espouses also banks on broad participation, stressing strong linkages among different sectors. He said that “government would be investing anyway, so why not carefully choose the sectors it would invest in?” Montes further emphasized that good policies in health and education, while they cannot strictly be considered industrial policy, could be relevant ingredients of industrial policy. For instance, government can put more support to science and technology research in the universities, and harness the country’s substantial healthcare workforce towards the adoption of higher technology. Doing this effectively prepares the country for higher industries, he explained.
Atty. Nepomuceno Malaluan of the policy group Action for Economic Reforms (AER) and Co-Convenor of the Development Roundtable Series who also spoke in the RTD, pointed out that the too-aggressive implementation of the Philippine government of its trade liberalization policy has marginalized the weak sectors (e.g. agriculture). Contrary to all predictions that trade liberalization would prop up industry and agriculture, data show that it has weakened these basic sectors, Malaluan said.
He added that the trade policies did not usher in industrialization and development but shifted domestic capital away from industry and agriculture. “Unfortunately, in the 30 years of trade liberalization Philippine-style, the economy has settled into its new structure. Big capital has adjusted. If we look at the country’s 40 richest, they have all diversified away from agriculture and manufacturing into services and non-tradeables, particularly utilities, property, retail trade and infrastructure.”
As an immediate relief, Malaluan proposed a modest across-the-board adjustment of tariff rates comparable to the country’s immediate Asian neighbors. This will recover some protection for domestic production, lift income and employment, and improve the prospects of Philippine agriculture. Beyond this, he said that it is time to talk seriously about industrial policy.
The roundtable discussion was jointly sponsored by Action for Economic Reforms (AER), Focus on the Global South – Philippines Program, EU-ASEAN FTA Campaign Network, Philippine Rural Reconstruction Movement (PRRM) and the Development Roundtable Series (DRTS).
*For inquiries please get in touch with Clarissa V. Militante (
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Industrial Policy Still the Way to Go – UN expert
Southeast Asian groups petition ASEAN for information disclosure
More than 80 advocacy groups and people's organizations from across the Southeast Asian region submitted letter-petitions for information disclosure to the ASEAN's Committee of Permanent Representatives (CPR) and the ASEAN Intergovernmental Commission on Human Rights (AICHR). Citing important mandates from the ASEAN Charter, the groups requested the two bodies to share information related to their work on civil society accreditation and guidelines for engagement with civil society, the AICHR's guidelines of operation, the terms of reference for the drafting of the ASEAN Human Rights Declaration, and the terms of reference for the thematic study on Corporate Social Responsibility and Human Rights. According tho the letter-petitions, access to information is a first and necessary step towards meaningful people's participation in ASEAN.
Capital is a Fickle Lover*
by Walden Bello
"China is today the ideal capitalist state: freedom for capital, with the state doing the 'dirty job' of controlling the workers,” writes the prominent Slovenian philosopher Slavoj Zizek. “China as the emerging power of the twenty first century …seems to embody a new kind of capitalism: disregard for ecological consequences, disdain for workers' rights, everything subordinated to the ruthless drive to develop and become the new world force."
Akbayan Congressman and Focus founder Walden Bello debates Thai Prime Minister Abhisit Vejjajiva on "Asia: Who Owns the Wealth"
The debate sponsored by the British Broadcasting Corporation (BBC) takes place 2-415 pm, Monday, June 13 at the World Economic Forum (WEF) being held at the Shangri-la Hotel in Jakarta, Indonesia. The event is a special edition of the BBC's World Debate Program. It will be broadcast at the following dates and times:
Rep. Walden Bello Releases Results of Investigation on Trafficked OFWs
Results of an Investigation by Rep. Walden Bello, Chair of the Committee on Overseas Workers’ Affairs (COWA), House of Representatives, Philippines, was released May 25, 2011. After the referral to the Committee on Overseas Workers Affairs (COWA) of a speech by Deputy Speaker Erin Tañada on the plight of 11 OFWs in Los Angeles, California, USA, the Chair of the Committee conducted an investigation of the case while in the United States during the congressional break around two months ago.
[Video] Joy Chavez on the Divides of ASEAN and the Possibilities of Alternative Regionalisms
As ASEAN nears its 44th year, what social divides continue to haunt the governments and the peoples of the regional association? Similarly, what opportunities exist for other types of regionalism to emerge in the present conjuncture?
Here, Jenina Joy Chavez of Focus on the Global South addresses the questions and more in the Opening Plenary of the 2011 ACSC/APF in Jakarta, Indonesia. "We [Civil Society] must assert ourselves," she contends, pointing to the real prospects of steering ASEAN in alternative, pro-people directions.
The International Finance Corporation’s Involvement in the Philippines: An Overview
By: Mary Ann Manahan*, Focus on the Global South
For the CSO Workshop and Strategy Meeting for the Review of the IFC Sustainability Framework Organized by: Alyansa Tigil Mina, BIC, and PIPLINKS
The International Finance Corporation (IFC) is the private sector arm of the World Bank Group and is independent of the World Bank. Its main mission is “to promote private sector investment in the developing countries, which will reduce poverty and improve people’s lives”. IFC finances investments with its own resources and by mobilizing capital in the international financial markets. Its charter requires it to be profitable and profits are ensured through the cash flows from the projects it invests on. It also provides technical assistance and advisory services to governments and businesses.
This paper provides a short background on the state of IFC’s involvement and investment in the Philippines, in particular for the last ten years. It offers a narrative- description and facts as well as critical insights on potential flashpoint cases and issues, which can trigger complaints from communities or other parties based on the provisions of the IFC Sustainability Framework. The bigger context upon which this paper was conceptualized and written is the on-going review of IFC’s Performance Standards and Sustainability Framework. The author did desktop research and culled information that IFC website is publicly disclosing. Research assistance was provided by Wanlapa Komkai, Bank Information Center (BIC) Mekong summer intern. This paper, therefore, must be seen as an overview paper rather than an in-depth study. Finally, this was presented at the CSO Workshop and Strategy Meeting organized by Alyansa Tigil Mina (ATM), BIC, and PIPLINKS, who also commissioned the study, on July 7, 2010. Comments from the participants and some of the latest developments about IFC’s investment in the country have been incorporated in this latest draft.
Afterthoughts: Our Failed Labor-Export Policy
By Walden Bello
The impacts of disasters occurring in other parts of the world, from Libya to Japan, have perhaps been communicated more drastically to the Philippines than to other countries. Whether it is the tragic trilogy of earthquake, tsunami, and nuclear fallout in Japan or the civil war in Libya, external crises are swiftly transformed into internal crises for our country, as thousands of families are pushed into poverty and economic hardship when their breadwinners are dislocated and repatriated back to the Philippines, where jobs offering decent wages are scarce.
EU’s Agenda in Asean
Mr. Purugganan's letter to the Editor was published by the Jakarta Post; this was in response to the article on the EU-Asean FTA written by Mr. Werner Hoyer, Minister of State of the German Federal Foreign Office. The original title of the letter was "EU's Ambitious Agenda in Asean." http://www.thejakartapost.com/news/2011/03/15/letter-eu%E2%80%99s-agenda-asean.html
The real reason why the EU-ASEAN FTA negotiations were put on pause is that the level of ambition that ASEAN was ready to commit to the EU was not on par with what the EU had in mind when it launched the talks with ASEAN in 2007.
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