The Philippine Development Plan Chapter 6: Towards a Resilient and Inclusive
Financial Sector
A Critique Paper
The Philippine Development Plan set by the government establishes 3 objectives
for achieving full potential growth; a three-type growth objective that any developing
country would like to achieve to earn its first world country status. The dream of
reducing poverty, unemployment, and stagnation in the economic activity of the
Philippine country has been and should be a vision by every president elected. We have
the 39th rank in worldwide GDP, a boost to 93.5% employment rate and an impressive
97.5% literacy rate. These set of statistics are a boost in our reputation of being
economically sound but a rank in the 85th level of a global corruption index and a 79 in
poverty says otherwise. An outsider can see the improvement of our country but the
citizens living within the boundaries beg to differ. Over the years, we have developed a
profound skill in hiding our poverty. We are the little kid living on welfare who badly
desires to keep up with the popular cliques in school so he buys an Iphone and a Nike
shoes with his mother’s savings. He doesn’t look at the future and the need for the
savings in more important terms because he desperately wants to sit in the cool kids
table right now. Philippine delegates can brag all it want of our tall towers in Makati, the
high class setting of the Bonifacio Global City, the rise of BPOs in Pasig and Ortigas,
and the augmented tourist destinations in Cebu and Subic but as always, there are two
sides of the coin. An outsider may see prosperity but natives can see the back door to
this story. With a widening wealth inequality, the Philippines is not a newbie in the
games of socio-economic issues that it’s drowning in. Philippines severely wants to fly
but poverty and corruption is plucking its feathers away. This plan is rudimentary and
highly in its embryonic stage.
An establishment of a development plan signifies that there has been a
hindrance in the economic and financial system. The Philippine Development plan
covers the important grounds that we have been battling with since the times of our
father’s father: unemployment, poverty and corruption. The development plan has 5
strategies, namely, (1) massive investment in infrastructure, (2) transparent and
responsive governance, (3) human development and improves social services, (4)
competitiveness to generate employment, and (5) access to financing. An investment in
the infrastructure and competitiveness means public spending and generating
employment, access to financing means opportunities of credit and increased spending
with debt, improving governance means battling corruption, and social services means
distributing the wealth from its inequality. The plan is governed by the microeconomic,
macroeconomic, social, and political principles. It might be called the perfect mix of a
good development plan. A plan is a good plan until someone attempts to implements it
and realizes it doesn’t work. What is the goodness of a plan on a piece of paper without
proper execution? A poor implementation of financial policies leads to further crisis and
destruction. This story is not a what-if and a trial-and-error plan. This has not been the
first. We’ve lived and seen this before. The Philippine Development has not been the
first attempt to fix the anomalies and this certainly won’t be the last. A plan to fill the
bowl with water seems prodigious until one overlooks that the bowl has holes.
The challenges we faced in the aberrations of our economic and financial models
is extraordinary. First, there is a lack of financial literacy within the poorer provincial
states of the Philippines. They are hardly aware of the threat of inflation and the benefits
of investing. The rural areas are still in the dark on how banking sectors work and how it
benefits the improvement of an economy. This presumption is proven by the drastic
number of victims in pyramid and networking scams. Another, there is a low trust rate
aimed at the bank due to its regality or poor confidence that the bank can serve what
they need. Application for loans is strenuous, the requirements and the process for
increasing the availability of credit to further increase the ability to spend is painstakingly
high to the poor residential areas. Banks are the king of today’s economic model, as it
was highlighted in the Chapter 6. The plan amplifies five key points in improving the
financial sector. The plan aims to improve its mobilization of savings, stabilization of the
financial markets in times of crisis, supervise and regulate to prevent inefficiency,
maximize exposure to foreign opportunities, and dissipate financial literacy within
regions. There had been reservations whether giving liberation to the banking sector
while monitoring it can go hand in hand; this rather sounds too good to be true. The
action to disperse of the banking sector while improving the financial learning of the
household members is a logical action to solve deterrence of the flow of money from the
household to the business sectors. The spread of banking sectors can improve the
efficiency of allocating resources and credit to provide for the sectors that properly need
the financing to expand its capacity in production. Theoretically, an increase in financing
of the business sectors can provide an increase in employment and being employed
can fuel your spending proficiency which in turn fuels the economic activity of the
country. However, while improving the utilization of savings deems to be the safest and
the lowest risk of all, the plan intends to open the doors to a larger pool of risk in the
promise of a high potential of return. This highlights the plan to make use of the savers
and turn them into investors and borrowers as well. Investing and borrowing without a
doubt can lead to euphoric and greater means. This and all of its other perks such as
providing financing, generating income, increasing your spending power, and improving
your credit worthiness has been a reverie of any citizen wanting to taste a much better
type of living. Although this may sound promising and if all else is equal and no
economic crisis happens, which highly was never the case in a developing country, it
may look like a well thought-out plan. A promise of monitoring the financial markets,
such as the stock, bond, money market, and the ease of loan application and
distribution, while in turn giving them the right of liberty might show complications in the
long run.
To answer the question, is this the plan that can solve our problem? Is the plan
viable and applicable to our current state of thinking and living? Are the modern
housewives and mother of two even willing to sit down and listen to the functions of a
financial system? Can anyone attest to reply and fortify that the plan is invincible? We
cannot ignore the possibility of a conflict of interest by the government focusing to
implement the development plan. Present and immediate prosperity signals a
performance well done and this secures their place in the next election. Present profits
signals higher commissions for banking sectors without the stating whether the
transaction completed was an accountable and secured one. This has been all too
familiar and enough to say that we are going to a road where a financial bubble is
waiting for us at the end. However, it is irresponsible to imply that credit or debt is
malice, in fact, without the loans and deposits, our country on this age cannot survive a
longer residence of economic stagnation. We must contemplate and decide on a tradeoff. The trade-off of increasing our potential to engage in spending and help ignite the
economic activity while living on consumer debt or living miserly with the assurance of
the absence of recessions in the long run. The plan is forgetting that the market is not
run by a robot where it can process activities with underlying rules and good practices;
the market is run by people, and the people are run by their emotions; basically any one
of us with a too big to fail personality, can be fueled and be enticed with greed at the
presence of money. And basing on our history, malpractices and manipulations has
always been present whenever it can. The 1929 Great Depression was fueled by the
deregulation of the market, the explosion of the number of investors participating, and
the price manipulations of the banks to increase their profit. All of these key points that
the plan wishes to happen has the similarities to not just the great depression but to any
financial crisis experienced by a deregulated sovereign country; this must be a red flag
to anyone asking to implement as it is showing patterns of an impending crisis that is
bound to happen. Unless, the government stays true to its word that the education of
financial principles to regular citizens will be implemented and that the presence of
regulators will be present at times, to protect the market from abuse of power, and to
prevent and practice risk and crisis management, then it might not be too bad to be a
little optimistic of the future it can bring to the Philippines with this financial growth plan.