Bernardo M. Villegas
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Philippine Society After the Pandemic (Part 2)

         We shall remember the pandemic as the period in which Vietnam surpassed the Philippines in GDP per capita.  The IMF reported in October 2020 that the GDP per capita of Vietnam was at $3,945 while that of the Philippines  decreased to $3,373.  Vietnam has done an excellent job of limiting the negative impact of the pandemic with close to  zero death and has improved its agricultural productivity more successfully than the Philippines.  It also has attracted much more Foreign Direct Investments (FDIs) than we have.  This post-pandemic reality of Vietnam joining Singapore, Malaysia, Thailand and Indonesia in leaving us behind in the GDP per capita race should serve as a motivation for the entire Philippine society  to devote more resources to the agricultural sector and to remove the remaining obstacles to attracting FDIs, especially the restrictions in our Constitution against foreign investments in strategic industries.  I would, therefore, dare to speculate that positive results of the pandemic are an increase in our motivation to reverse the decades-old neglect of agricultural productivity and heightened efforts to make our country more attractive to FDIs.

         Because of the big drop in our GDP in 2020, it will take us about four years from 2022 to reach the GDP per capita level of $4,000—which is the threshold for an economy to be considered high-middle income.   It will be, therefore, sometime in 2026—more than halfway in the next presidential term—that our economy will acquire the status of a high-middle income which characterizes Thailand and Malaysia today.  By that time, our population that is still growing at 1.35 percent annually will have swelled to about 120 million according to a projection of the Philippine Statistical Authority (high estimate), a consumer market that will be very attractive to numerous domestic enterprises that do not even have to think of exports to be financially viable.  With such a population enjoying a per capita income of $4,000 or more, an inward-looking industrialization policy can be viable (it was not viable at the beginning of our industrialization in the last century because our domestic market did not have the purchasing power then).  We will have to export only to the extent that we need to import needed raw materials and manufactured products that we cannot efficiently produce locally.  Like China and Indonesia, our export-to-GDP ratio will continue to be among the lowest in the Indo-Pacific region.  If we succeed in increasing significantly the productivity of our agribusiness sector, the bulk of our exports will be high-value agricultural products resembling those of Thailand, Vietnam and Malaysia today.  As half of the population of China today who are still considered poor are able to reach middle-income level, China’s demand for food will be mind-boggling so that food security will be a serious concern of the leaders of China.  Southeast Asia will be a major food belt for this largest economy in the world and hopefully, the Philippines will join its Southeast Asian neighbors to supply China with a host of high-value agricultural products.

   The post-pandemic Philippine economy will be saddled with higher rates of poverty.   Before the pandemic, the poverty incidence was already brought down to 16.5 percent from the high of 23 percent at the beginning of the Duterte Administration.  The big drop in GDP and the rise in unemployment, which is still at the level of 10 percent during the last quarter of 2020, have swelled the ranks of the very poor.  The conditional cash transfer (the four Ps) program as well as the Social Amelioration Program will have to be sustained for at least the next two years after the pandemic to bring down the poverty incidence to the targeted  14 per cent or less at the end of the Duterte Administration.   The most potent tools for reducing poverty in the long run are countryside and agricultural development and the nurturing of Micro, Small and Medium-Scale enterprises.  With such a high rate of poverty, we cannot avoid depending on the continuous migration of millions of Filipinos as overseas workers (OFWs) to the countries in the developed world that are suffering from very low fertility rates and very rapid ageing, especially in Europe and Northeast Asia.  Post-pandemic Philippines will differ little from pre-pandemic Philippines as regards the large number of Filipino workers seeking employment opportunities abroad.  Fortunately, there continues to be a large demand for Filipino workers abroad, especially in the health and wellness sector, travel and tourism, seafaring, construction and information technology.  We shall be seeing the dollar remittances from OFWs crossing the $40 billion line before 2026.

         Another sector that will continue to loom large in the Philippines economy after the pandemic is the IT-BPO industry, thanks to the growing, young and English-speaking population of the country.  As the developed world recovers, their appetite for outsourcing business services to India and the Philippines will increase as their businesses try to recover from their huge losses during the pandemic by cutting down on manpower costs.  Any effort of the US government to “bring jobs back to the US” will equally be frustrated as it was during both the Obama and Trump administrations.   There should be a serious effort of the BPO-IT industry, in cooperation with the formal and non-formal educational sectors, to upgrade or upskill their work force, especially of the voice-oriented BPO enterprises, so that more of them can transition to the knowledge process outsourcing (KPOs) industry which will be less susceptible to obsolescence by AI and robotization.  There should be more online courses offered by both the academe and the business sector that will sharpen the critical thinking skills, the effective communication abilities and the holistic thinking of the Filipino youth.  If the industry is able to significantly retrain their existing workers in the voice-oriented sector so that they can be redeployed more in the Knowledge Process Outsourcing (KPOs) enterprises, the ongoing deceleration of growth can be arrested and growth rates of 6 to 10 percent annually can be resumed.  Even if the growth is slowing down in the next two to three years, the industry is still expecting revenues of $29 billion in 2022, not an insignificant contribution to both GDP and employment which may surpass 1.4 million workers by then.

         With the lockdowns forcing schools at all levels to turn to blended learning methods, our formal educational system will never be the same again.  Even when face to face classes can be resumed once the vaccine for COVIDi-19 is widely distributed, schools will allow and even encourage their teachers to continue to deliver some of their classes online.  After having gotten used to such applications as Canvas, Blackboard, and other online methods of delivering knowledge, teachers would want to continue benefiting from the flexibility of synchronous and asynchronous instruction.  There will be a variety of combinations and permutations of classroom lectures, recorded sessions, online delivery of classes, google quizzes and other forms of blended learning.  Assuming responsible teachers and conscientious students, there can be a quality improvement in the educational process under various forms of blended learning, even already providing for the lack of access to good internet connections of a large number of students belonging to the lower-income households.  There are creative ways of combining online instruction with printed modules and lectures delivered through television or radio.  There are a good number of business startups that are capitalizing on these trends towards blended learning in Philippine schools at all levels.  (To be continued).