September 23, 2016

National industrialization - change we need

To any objective, impartial observer, there is no denying that mass poverty, chronic joblessness and socio-economic inequality constitute stark realities in the country today. Even the past Aquino government, while making extravagant claims about the “robust” state of the Philippine economy, has acknowledged the lack of “inclusive growth”.  Plainly speaking, this only means the rich are getting richer while the poor grow poorer.

The crux of the matter however lies on what socio-economic reforms - in government policies and programs and in the control of productive means such as land, capital and labor resources - need to be undertaken for the country to get out of the rut it has been in for centuries.

The answer of the neoliberal “globalization” mafia has not changed: more market-oriented reforms, i.e. more liberalization, deregulation, privatization and denationalization policies.  Poles apart are the latter-day Filipino nationalists who say “Enough!” to the failed foreign-dictated “globalization” paradigm. Their battle cry remains to be genuine land reform and honest-to-goodness national industrialization.

In a recent forum held at the College of Engineering in the University of the Philippines entitled “Change We Need”, speakers zeroed in on the backward, pre-industrial character of the economy and the whys and wherefores of national industrialization as key to building what our people have long aspired for - an independent, self-reliant, prosperous and equitable nation. The case study of the dismal state of the country’s steel industry served to validate both the analysis as well as the proposed solution.

Mr. Sonny Africa, from the independent think-tank IBON Foundation, kicked off with the rationale for national industrialization.  Despite a population of more than a hundred million (a huge prospective market and source of productive labor) and immense natural resources (mineral, agriculture, forestry, aquatic and energy resources), the domestic economy is increasingly unable to produce the jobs and incomes or the basic goods and services needed by the people.

He traced this to a backward, rural economy mired in a feudal system of land ownership and an “insignificant” industrial sector.  According to Africa, “The agricultural sector has fallen to its smallest share of the national economy in history…(with)…manufacturing down to what it was in the 1950s.” Worse is the fact that foreign transnational corporations account for two thirds of manufacturing output effectively denationalizing the manufacturing sector. The end result, according to Africa, is a “shallow service and trading economy rather than a producing economy since the 1990s.”

Focusing on industrial backwardness as cause of underdevelopment, Africa pointed to the immense adverse consequences of industrial backwardness starting with massive unemployment and underemployment forcing more than 5000 Filipinos a day to seek decent jobs abroad. For those left behind, majority are forced to accept  contractual employment under insecure, underpaid and unsafe working conditions.

The absence of a sound, integrated and Filipino-owned industrial sector in turn keeps the country’s science and technology sector backward resulting in the inevitable brain drain of the country’s best and brightest; keeps us dependent on foreign goods and services and prevents us from benefiting from our natural resources.

The only real solution lies in the reversal of de-industrialization and de-Filipinization policies that accelerated with the neoliberal globalization onslaught of the eighties.  This means the reversal of the current unproductive, foreign investor-dependent, market-driven industrial roadmap and its replacement with a new, progressive and long-term economic policy to develop national industries.

IBON has proposed a national industrialization roadmap, including a 100-day set of “doables”, that has been submitted to President Rodrigo Duterte.  This demonstrates that the call for national industrialization is not just empty sloganeering but is based on a deep analysis of prevailing conditions coupled with the necessary and practicable reform program to bring it to fruition.

Dr. Giovanni Tapang, AGHAM chairperson, expounded further on the need for industrialization given “1) the lack of basic industries; 2) no program for rural industrialization and agricultural modernization; 3) no genuine infrastructure in energy, transportation, communications, information technology and basic services ; 4) no clear linkages between different production stages from raw materials to finished goods”.

Dr. Tapang talked about building technical capacity for industrialization. To make sense to the “millennials” in the audience, Dr. Tapang phrased AGHAM’s proposed formula as constituting “hardware” or building industrial capacity for capital goods, industrial machinery and agricultural equipment’; “software” or building development plans, industrial policy, means for coordination and control and “liveware” or building human resources and technical knowhow.

The compelling case study of the Philippine steel industry was presented by Mr. Rafael Hidalgo, vice president of Steel Asia, a Filipino steel manufacturing company employing 3,000 workers in 5 existing mills and generating 15,000 more jobs supporting mill operations. He underscored the potential of a robust steel industry in job-generation.

Mr. Hidalgo stated that the Philippine steel industry has stagnated over the last 60 years, overtaken by even its smaller Southeast Asian neighbors. Being the “backbone industry” for national development, most governments have supported their steel industries especially in their early stages of development.  Sadly, this is not so for the Philippines with the government constituting part of the problem of the “under achieving” steel industry.

Mr. Hidalgo pointed to the irony of the country exporting its iron ore and even scrap iron when there is already a huge domestic demand for steel products that is in fact being met almost entirely by importation. The domestic market exists for a viable integrated steel mill capable of producing steel from iron ore (which we have in significant amounts) as well as steel mills producing midstream and downstream steel products linked to the construction industry, the manufacture of industrial steel structures, as well as the manufacture of cars, appliances and other everyday consumer products.  This potential is multiplied many times over should a policy of national industrialization be instituted.

He identified big comprador or big trading interests and their tentacles in government that have opposed the development of the domestic steel industry by arguing that it is cheaper to import steel products since there is a glut in the world market. Moreover, he pointed to free trade agreements that unfairly brought down trade barriers against imported steel to the detriment of local manufacturing and long-term self reliance.

Finally, Mr. Adel Silva, consultant of the National Democratic Front of the Philippines (NDFP) Negotiating Panel in peace talks with the Duterte government, shared that the NDFP’s 10-point program contains a firm commitment to national industrialization. In further rounds of peace talks, it will be a major bone of contention between the two Parties.

Should President Duterte’s repeated avowals to being a socialist translate into the GRP’s openness to reviewing, if not reversing, the current neoliberal economic policies, common ground could be found for crafting a blueprint for national industrialization.

Hopefully, this would constitute, along with agrarian reform and an independent foreign policy, a solid basis for forging a bilateral agreement on socio-economic reforms that will undergird any agreement on political and constitutional reforms. The latter in turn will lead to the agreement on end of hostilities/disposition of forces and the achievement of a just peace. #

Published in Business World
19 September 2016


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