Friday, January 11, 2008 Ledesma: Beware of populists and leftists agenda By Jun Ledesma Sunbursts
PRESIDENTIABLE Mar Roxas is proposing to scrap the 12% EVAT on oil while President Gloria and her economic advisers say they can only cut the importation tax on oil from three down to two percent.
Let the economists explain the difference in the implications of these two schemes. My basic math is too inadequate to explain the ABCs of the economics in these two proposals. However I want to go back to the past when the political opposition, to include most of the presidentiables today, pummeled the PGMA for imposing the 12 percent Evat. This was done at the time when the economy is teetering on the edge of disaster because of the ballooning budget deficit. Having imposed the expanded value added tax against all odds, the popularity of the president plummeted. Raffy Recto, the author of the bill was a collateral casualty.
The EVAT moreover proved to be a bitter pill that nursed the terminally ill economy back to the pink of health. So impressive was the effect of the EVAT that the International Monetary Fund has stopped hounding us. The talk is that anytime by 2008 we shall have a balance budget and a robust economy that will dwarf those of our immediate neighbors.
But the opposition does not want this positive development to come out to the fore. They want to scrap the 12 percent EVAT now instead of the reduction of the tariff because this is what appeals to the masses. But as we now know, to be popular does not necessarily mean one is correct. The difficulty here is how to make the masa comprehend why the imposition of the EVAT was right after all.
Notice how, to the man, the presidentiables among the opposition took the popular stand, which is to scrap the EVAT on oil. They gain a lot of pogi points. Moreover, what is the effect of this popular idea on our economy? A whooping loss of about P56-billion from the government revenue stream. Once this happens, we will slide back to the brink of crisis, a condition which will make the opposition happy but a state where the masa will be confused why they are having less food in their tables instead of the rosy and fascinating picture of bonanza that the populist politicians promised.
You can hate the guts of President Arroyo and add to that the contempt over some scandals, but I will give it to her for managing our economy quite deftly. I do not expect an immediate bonanza as some quarters do, but certainly the apprehension that our country is going to the dogs is the least of our worry now. There is no debate about the unprecedented inflow of dollars from our OFWs but we cannot ignore the fact that not a few foreign investors have started to bring in fresh capital for various projects the most recent of this is the $2-billion Hanjin shipbuilding venture in Phivedec in Misamis Oriental in the northern rim of Mindanao. Expect about 20,000 vocational graduates to be employed once this starts operating. The local mining industry has started to lure foreign investors and its potentials is barely tapped. In Davao we are experiencing a dramatic increase of exports of processed fruit products in addition to the sustained and expanding agricultural products exports.
Surely the rise of prices of oil products will be here to stay. But the scrapping of EVAT as proposed by the opposition will not wash. The traffic reduction is plausible. But we should now look at other solutions to mitigate the impact of the price of black gold. We have to reduce our dependence on imported oil. We should revisit the nuclear energy project. We should tap our natural gas deposits, plant the millions of denuded mountains with jatropha or tuba-tuba and other crops that produce renewable fuel. We Mindanaowons are lucky. We have natural resources, which can be tapped to energize our industries and homes. Underneath, in the bowels of our earth, we have vast reserves of natural gas, aside from the rich resource of valuable minerals. We should look at our potentials and not be paralyzed by the negative perception of a few politicians and leftists who thrive in misery and where there is none create one.
