Finally, An Economic Czar?

“It is about the economy, stupid!” – Bill Clinton

Malacanang issued EO 49 creating the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) with Cabinet rank. The mandate of the new unit is as ambitious as its name is long, to spearhead the economy. The body will be headed by Frederick “Deck” Go, former CEO of Robinson’s Land, a Gokongwei company. Mr. Go comes with impressive credentials. He brings real life experience in running a successful business which is lacking in our technocrats. He follows in the wake of another seemingly good appointment, that of DA Sec. Tiu Laurel. Deck was previously Presidential Adviser on Economic Affairs so he has moved from advising to executing.

EO 49 is a reflection (a rebuke?) of the current economic team which is generally seen to have underperformed. The re-organization will hopefully tighten and focus our development efforts. Deck Go will become the de facto Economic Czar with NEDA, DOF, DTI and the economic agencies reporting to him. The NEDA and DoF Secretaries are co-chairs of OSAPIEA.

There was arguably no need for EO 49. Under Art. XII Sec. 9 of the Constitution the NEDA is tasked “to implement continuing integrated and coordinated programs for national development”. NEDA is chaired by the President with a Secretary of Socio Economic Planning as implementing head. Historically NEDA never assumed this role as lead economic agency. From the time of Cesar Virata who was both Prime Minister and Finance Secretary, the economy has de facto been headed by the Secretaries of Finance with the NEDA head as sidekick, the Robin to the DoF Batman, the Tonto to the Lone Ranger. This is largely a function of the power of the purse holder as well as the force of personalities. NEDA was relegated to perfunctorily signing off on project approvals and foreign grants and such. 

All the President had to do was restore and expand NEDA’s constitutional mandate to its rightful role and appoint Mr. Go as NEDA Secretary overseeing all Government economic agencies. This would avoid any legal challenges to OSAPIEA, having to re-invent the wheel and double staffing and office space. Deck could hit the ground running.

The restructuring follows a slowing of the economy in the early part of the year with a recovery in Q3 driven not by consumption and investment, the catalysts one wants to see which were flat; but by a surge in Government spending that is not sustainable given our limited fiscal head room. Foreign direct investments have continued to decline for over a year now despite all the presidential trips that were supposedly to flood the country with external funds and laws like the Public Services Act that loosened the restrictions on foreign investors. Our stock market is at historic lows.

When assuming office in July 2022 the President proudly announced his “Economic Dream Team”of Diokno, Barisacan, Pascual and BSP Gov. Medalla. Eighteen months later this group has not delivered on the “dream” part of its credentials (Medalla has since departed ousted, it is said, by his former mentor). Ask the exporters, aviation fuel suppliers, military pensioners, private hospitals, frontliners, contractors and teachers who after 4 years are still to be paid what is owed them. Ask the unemployed. Ask the parents whose kids are unenrolled or dropped out. Ask those with no AYUDA or proper health care. Ask the Filipino, 48% of whom believe themselves to be poor. 

The organizational changes come at a time when the popularity of the President is dropping precipitously. His trust rating in a Sept. survey fell from 80% to 65% and has further dropped in a Publicus Asia poll Nov. 25-Dec. 4 to 48%, below the key half way metric. VP Sara’s number also fell to 53%, Speaker Romualdez to 25%. These are not the numbers Malacanang wants to see going into the crucial 2025 midterm elections. The Administration will still likely keep a  majority in the House, perhaps less so in the Senate, but there could be a mass exodus thereafter if its popularity continues its decline going into the 2028 elections. 

 Sec. Go has his work cut out for him. His biggest challenge in the immediate is to re-store the private sector trust in this Government. The latest BSP survey shows the Business Confidence Index dropped from 53.8% to 38.2% for Q1 next year and to 54% from 60% for the full year; from lower consumer demand and high borrowing costs. The same report saw the Consumer Confidence Index slip from 7.8% to 5.6% for Q1 2024 and to 15% from 19% for the full year from inflation and unemployment. The political uncertainties, the cost and lengthy process of doing business, collecting what is due from Government, inflation, jobs, conflicting monetary and fiscal policies and, of course corruption; are taking a toll on the country. 

The OSIAPEA is in charge of policy and monitoring but our problems are not about policy but about execution. For example the last Government lowered corporate taxes, passed CREATE and the PSA to promote investments with little to show for it. 

Mr. Go has the responsibility but not the authority to do what he has to do. As he knows well from his corporate experience a CEO’s effectivity is only as good as his unilateral power to hire and fire and that, as ex-Exec. Secretary Vic Rodriguez quickly discovered, is not among the powers of Mr. Go. He cannot do everything on his own and will be undermined not only by those he has subverted but also by those whose territory he threatens. He could whine to the President about the political interference but notwithstanding his closeness to BBM he can never rival the influence from sleeping nightly in the President’s bed or being connected by blood.

To be successful Mr. Go has to have people he can hand pick, professionals who will follow his orders, who are loyal and accountable to him alone. He does not have that in his position however formidable on paper. The implementation of policy lies with the regulatory heads many of whom are beholden for their appointments to the First Lady and/or the Speaker. The key agencies are sprinkled with LAM’s law partners, friends, relatives and relations thereof; and the Speaker’s Upsilonian brothers. The word is if you want something done, do not talk to the Cabinet Secretaries but to the President’s immediate and extended family. Such a system is common practice in previous Administrations with the difference arguably being in the scale in this one.

 There exists in our nation a Deep State, a Government within a Government, with its own protocols, chain of command and omertà. It is not accountable to the institutional and constitutional safeguards nor to the public. It responds only to heads who are unelected or not elected to do what they are doing. I estimate this underground empire has revenues, annually, of some one trillion pesos or 5% of our GDP from its various controversial activities which is shared by the shadow players, “the boys” and the political chiefs who make it all possible. Anybody however competent or personally connected to the President who moves into their lane is bound to be challenged.

Mr. Go’s personal relationship to the President is nonetheless important, an advantage not enjoyed by the current technocrats. He must bring to the table not only management skills but a political acumen to navigate the Palace cross fires. He must be ready to grow old quickly. I am certain Mr. Go knows what he signed up for and has been assured of the “unconditional” support of the President but that support could itself wear thin. Given the challenges of pivoting a complex, debt laden, bureaucratic and leaking ship of state without your own team, Deck will in my opinion be hard-pressed to produce the deliverables expected of him in the pre-election period of 2024 and 2027; and that will be mined by those with the long knives. The natives are restless.

I wish Deck the best of luck and the nation’s appreciation for taking on what is an important if thankless job. Sir, we shall be rooting for you.