While the process for developing a platform is relatively easy, it does require several careful steps. Recently, in response to several challenges to provide an example of a proper platform and in the hope of providing some issues for public discussion, I applied the Roadmapping 101 Framework to the issues that I personally felt were important in the upcoming election and produced my own platform. I will of course stress over and over again that these ideas are mine alone, and that any agreement or other similarity they have with anyone else’s is a largely coincidental result of great minds thinking alike. In reviewing my methodology, I quickly realised that none of the men who at present has an apparently legitimate shot at the presidency has displayed anything that even remotely resembles an acceptable thought process in taking the vague positions they have deigned to share with the public. So as an introduction to the first of what will be several detailed discussions of the various ills of the Philippines and how to fix them, an explanation of what the candidates should be doing – as opposed to making hand gestures and saying words like “integrity” and “character” over and over again – is in order.
The three uppermost ‘layers’ of the Roadmapping 101 framework are a form of Cause Mapping, which is in essence simply an organised way in which to repeatedly ask the question “Why?” until the root cause of the aspect of the subject is reached. In our example topic here, the Economy, we can describe its aspect in a very general way: “Needs Improvement”. The natural follow-up question is, “Why does the Economy need improvement?” The answer is the situation, or set of conditions that manifest the aspect of the Economy, which naturally leads to the next question, “Why do these situations exist?” The issues that cause the specific situations are the root causes of the overall aspect of the Economy. These issues in all likelihood have sub-causes, which then become the targets of the positions to be taken with regard to the overall topic of the Economy.
For a presidential candidate, the process has two aims: First and most importantly, it is a process to determine the best course of action to take when or if the candidate reaches office, and so it must be approached with serious realism. On the other hand, there is a second consideration, and that is to anticipate and hopefully present a better alternative to the position the opposing candidate will take. In that light, every candidate is then presented with at least three options for every position: maintaining the status quo, an option that will represent the candidate’s position, and the option which is likely to or at least might represent his opponent’s position. The latter two options will require specific actions, while the first does not:
Once the specific actions have been determined, there is the matter of presentation: express the problem or issue in clear terms, state the proposed solution or objective, and explain the rationale for that choice. The first part of the platform addresses the Economy, and is divided into a number of smaller subject areas, beginning with Economic Policy, which includes three different positions or objectives:
PROBLEM #1: A weak and fluctuating Peso is a disadvantage to the country, causing price pressures and presenting the obstacle of uncertainty to the country’s import and export sectors, which ultimately has a negative effect on all Filipinos.
SOLUTION: Change the functional peg of the Peso from the US Dollar alone to a basket of appropriate currencies, most likely the US Dollar, the Euro, and the Japanese Yen.
RATIONALE: Although the Philippines adopted a floating exchange rate regime in the mid-1960’s, the management of the currency has become, without an official change in policy, a managed float against the US Dollar. Although a traditional peg against the Dollar has occasionally been proposed, studies by the IMF have shown that the basket peg provides greater currency stability, particularly for emerging and developing economies. Because of the Philippines’ disadvantage in trade, a trade-weighted basket peg is not optimal, but a small basket wherein the exogenous cross-exchange-rates can be monitored and managed is, provided the BSP takes a more pro-active approach to reviewing and announcing adjustments and intervention conditions. (Daniels, Toumanoff, & von der Rohr, 2001) A more stable currency with less frequent and less significant shifts in value will help stabilise prices, make debt servicing less costly and easier to forecast, and reduce the exchange disadvantages that are currently affecting the country’s export sector.
PROBLEM #2: Servicing the national debt is too costly, taking money that is badly-needed from other programs.
SOLUTION: Renegotiate the terms of debt repayment with creditor nations.
RATIONALE: It does not take a financial wizard to recognise the current ration of the Philippines’ debt-to-GDP of 56.5% is a major obstacle to growth and development, and with the ADB projecting potential increases in this percentage of between 3% and 15% in the next six years, the situation may only grow worse. Even a moderate reduction in the amount of the budget the government must dedicate to paying the nation’s debts is a functional increase in GDP, which improves the country’s credit position and overall productivity, making further debt reduction possible. Sound fiscal management policies, such as the stabilisation of the currency already mentioned and other measures in this platform, will give the government a more credible position from which to negotiate better terms from sovereign creditors, a position it does not have now.
PROBLEM #3: Over-reliance on foreign sources of capital creates an unacceptable cash-flow risk for the country: it may affect the country’s credit rating, and places too much control over the inflow of funds into foreign hands, making those sources susceptible to problems over which the Philippines has no control.
SOLUTION: This problem involves several different areas of concern, but one of those which can be addressed in a straightforward way is to prohibit the issuance of so-called “samurai bonds.”
RATIONALE: A “samurai bond” is a bond issued by one country in another country, in this case by the Philippines in Japan, hence the name. The bond issue is subject to the regulations of the country in which it is sold, and is denominated in the local currency. The BSP is proposing to make a samurai bond issue in the 4th quarter of this year, the first since 2000, in order to reduce the unexpected budget deficit brought on by the worldwide financial crisis.
While a samurai bond issue does have a short-term benefit, it has unacceptable risks and costs. The bond issue will be partly or wholly guaranteed by the Bank of Japan, which charges a percentage apart from the interest on the bond that the RP will have to pay. While it is not likely to happen, withdrawal of the guarantee is a Japanese prerogative, which would virtually destroy the Philippines’ credit. In addition, other exogenous factors that cause a drop in value of the bonds can be destabilising to the Japanese financial sector, with very bad long-term consequences for the relationship between the two countries. (Litan, et al., 2002) It is a far better proposition to improve fiscal management within the Philippines, and avoid the unnecessary risks and extra costs of small, short-term gains.
These proposals are just the beginning of the solutions for the country, but they are important, fundamental ideas. They will provide a firm, stable foundation for the national economy well beyond the end of the next presidential term, and allow many other much-needed improvements to be made. Their greatest significance to our continuing discussion of platforms and plans is that they are a clear example of just how easy it is to develop solutions. The Philippines has many problems, but not many complex or insoluble ones. Time, effort, and a little thought goes a long way toward developing the means to correct them; if the electorate cannot expect anything else from their candidates, they ought to be able to expect those three things.
Daniels, Joseph P., Toumanoff, Peter G., and von der Ruhr, Marc. (2001) “Optimal Currency Basket Pegs for Developing and Emerging Economies”. Journal of Economic Integration, 16(1): 128-145.
Litan, R. E., Pomerleano, M., Sundararajan, V., World Bank, and the International Monetary Fund. (2002) Financial Sector Governance. Washington, D.C.: Brookings Institution Press.