- 2 days ago
The Philippine economy continues to face both opportunities and challenges—from inflation and employment to investments, consumer spending and long-term growth. But where is the country headed, and how will these developments affect the lives of ordinary Filipinos?
Join us on Beyond the Headlines as we sit down with Antonio Jacinto, economics professor at Ateneo de Manila University, for an in-depth discussion on the country's economic outlook. We'll examine the key issues driving the economy, the impact of government policies, and what businesses, workers and consumers can expect in the months ahead.
Be part of the conversation and gain valuable insights from an expert who will help explain the numbers beyond the headlines.
📅 Today
🕛 12 noon
📍 Live on SunStar Web TV
Look Deeper. Think Better.
Join us on Beyond the Headlines as we sit down with Antonio Jacinto, economics professor at Ateneo de Manila University, for an in-depth discussion on the country's economic outlook. We'll examine the key issues driving the economy, the impact of government policies, and what businesses, workers and consumers can expect in the months ahead.
Be part of the conversation and gain valuable insights from an expert who will help explain the numbers beyond the headlines.
📅 Today
🕛 12 noon
📍 Live on SunStar Web TV
Look Deeper. Think Better.
Category
🗞
NewsTranscript
01:00Then, everything else.
01:03Good afternoon and welcome to Beyond the Headlines.
01:06I'm DJ Moises and today's conversation is brought to us by Coffee First.
01:11The Philippines has recently achieved upper middle income status.
01:17The president has proposed tax reforms.
01:21Inflation remains a concern.
01:23Economic growth has slowed.
01:25But for most Filipinos, the real question is much simpler.
01:30Will life become more affordable?
01:32Will my salary go further?
01:35Will my family have a better future?
01:39This afternoon, we look deeper and think better with a distinguished banking and project finance consultant
01:47and a faculty member at the Ateneo Graduate School of Business, Professor Tony Jacinto.
01:54Hello, Prof. Tony.
01:55Welcome to Beyond the Headlines.
01:57Hi.
01:57Good afternoon, DJ.
01:59Pleasure to be here.
02:00Thank you very much.
02:01Yes.
02:01We're also grateful to have you here because we will dive deeper into some buzzwords that we've been hearing this
02:10year.
02:10And even before that, but I think more this year.
02:12So let's start with the World Bank officially classifying the Philippines as an upper middle income economy
02:23after our threshold actually breached, exceeded the threshold that was set by the World Bank.
02:32And by the way, the threshold I'm referring to is the gross national income per capita.
02:37And this is the first time that the country, after nearly four decades, has been languishing in the lower middle
02:45income economy.
02:47So, Prof, can you walk us through with this?
02:50And what does this mean to the everyday Filipino?
02:55Okay.
02:56Thank you, DJ.
02:56You know, I think we should, for the benefit of the viewers and the listeners, we should first examine the
03:08components,
03:09what we mean when we talk about gross national income.
03:13So, gross national income is just an expanded definition of gross domestic product.
03:20And gross domestic product is the composition of household consumption, government spending, and business capital formation.
03:31So, when you get these three components and add there the exports, less the imports,
03:37then you come up with the GDP formula.
03:40And then you add to that the primary income, and you come up with the gross national income.
03:45So, the gross national income, when you divide that by the population, that's what you call the gross national income
03:53per capita.
03:55So, that's the basis of what was used by the World Bank.
03:59The gross national income divided by the number of individuals in the country, that's going to come up with the
04:07GNI per capita.
04:08And that's the basis.
04:10And then they use an exchange rate based on what the World Bank calls the ATLUS method.
04:16So, it's a method of smoothing out three years average foreign exchange.
04:22So, when you come up with that number, that number is used now as a basis into falling into one
04:29of the four general categories of the World Bank.
04:32So, there are four categories of the World Bank in terms of income.
04:38So, one is the low income threshold.
04:40Then there is the lower middle income threshold.
04:44And then the third one is the upper middle income threshold.
04:48And the fourth highest one is the high income threshold.
04:51Now, it's between the second and the third, wherein the Philippines moved from the lower middle income to the upper
04:58middle income threshold.
05:00So, we breached that finally.
05:03We hit that fourth, the lower end of the threshold of the upper middle income category is $4,516.
05:12And we were able to finally hit that on a per capita basis.
05:16So, that's something to, it is certainly an achievement, something for us to welcome.
05:26And, DJ, just to give you more, and the viewers more information, the upper middle income category is quite wide.
05:35You hit the upper middle income from $4,516 to $14,000.
05:42It's a very wide range for the upper middle income portion.
05:50We were able to go from the lower middle income portion, which was less than $4,516, and finally hit
05:57the $4,516 plus.
06:00And we actually made it on the low, very low end.
06:03So, when we say that we're upper middle income, we're actually bunched together with a whole wide category, a huge
06:11number of countries.
06:12But we're at that lower end.
06:13So, I think we should put that in context, we're on the lower end of the upper middle income.
06:18And then, despite our having achieved this, there are still challenges that remain ahead.
06:24So, I wanted to start this off by saying that, yes, it's an achievement, but I also wanted to give
06:32the listeners and the audience an appreciation of how the computation was derived.
06:41And once we know how the computation was derived, then we can go deeper into the discussion.
06:47And so, Prof, given that, and thank you for clarifying that the upper middle income bracket set by the World
06:56Bank is actually very wide.
06:58And the Philippines is just on the lower part of the bracket.
07:02So, is it safe to say that this is going to translate significantly on how everyday Filipinos would experience life
07:16in the Philippines?
07:18Okay.
07:19That's really the next question.
07:24What does this mean for us?
07:25And since it's an average of per capita, does it mean that each household has improved?
07:34Okay.
07:35It's an aggregate divided by the population.
07:37So, it's actually an average.
07:39It doesn't really speak for the, it doesn't really get into the granularity of how households are individually affected.
07:51So, one is it's just a general criteria of development, but does it tap into the, does it give us
07:59a good picture of what the households are experiencing?
08:05Or what about the income classes?
08:07Does it mean that the lower income classes have improved or the middle income classes?
08:12It could mean that maybe the higher income bracket improved greatly enough to pull up the average.
08:21So, the way to address this is economists have a measure called, to measure the income disparity between the lowest
08:33income and the highest income group.
08:36And it's called the Gini coefficient.
08:38So, when we look at the UMIC, we should look at it in context together with what we call the
08:46Gini coefficient.
08:48That's spelled G-I-N-I, coefficient.
08:51So, you say, what's the Gini coefficient?
08:53The Gini coefficient is a good measure, it was developed by economists, that is from zero to one.
08:59And the closer you are to one, that means the greater the inequality.
09:05And the closer you are to zero, the greater the inequality.
09:09So, where's the Philippines in this measure?
09:14Well, our measure, the latest measure per 2023, our Gini coefficient was 0.41.
09:24So, we're 0.41.
09:25So, what's the context of that?
09:27Our Gini coefficient was previously at 0.43.
09:31And we became 0.41 over three, four years.
09:35So, we improved slightly by 0.02.
09:40So, you want to drive that down much, much more, because it's saying that we did hit UMIC, but it
09:50should be, did the income disparity improve?
09:54And actually, it basically just slightly improved.
09:58So, that's what I refer to as the challenge.
10:01We have a challenge to help the growth, make sure that the growth is equitable.
10:09That's the challenge, you know.
10:11So, we grew as a country, but the question there is, did we grow together?
10:17Did all the income classes grow together?
10:21And we want to, that can be examined by looking at what I refer to, the economists refer to as
10:28the Gini coefficient or G-G-I-N-I coefficient.
10:32And there is a measure of that.
10:33Although it's measured periodically, it's not annual, because it is difficult to measure.
10:40So, the challenge, main challenge there is, is the growth equitable?
10:44So, going back to your question, what does it mean for the Philippine household is, one is, we want to
10:52make sure that the growth moving forward is equitable as much as possible.
10:58That everyone grows equally and no one is left behind.
11:05See, so that's very important, and that's something the economic policy planners should always, and do always, take into consideration.
11:15That how do we make sure that we institute policies that are as much as possible equitable across all income
11:23classes?
11:23And, you know, we'll find out, you know, I teach economics, and, you know, you find out in the course
11:29of discussions that it's more easily said than done to have policies in place that create equitable distribution effects.
11:41Well, hopefully, after this conversation, Prof, it would generate more interest for students to actually have their MBAs, you know,
11:51in schools like Ateneo Graduate School of Business.
11:54But that said, Prof, sige.
11:55So, if we then, and I like actually the term that you use about, can you highlight equitable, no?
12:03Because if we go over the same bracket explanation earlier, you just mentioned that it may have been generated by
12:11this, and then it just spread, you know, to the lower side.
12:15But it does not necessarily represent whether that's an experience that spread across.
12:21So, taking from your response, Prof, about making it then felt by the many, I know there are possible hows
12:31to this, but I'll zero in.
12:33On the quality of jobs, you know, that are available.
12:36Do you think this is also an area that our leaders and our economists would focus on how to bring
12:45these people here to here through the quality of work that's available?
12:54Okay.
12:56Okay.
12:57One is, again, thanks for that question, DJ.
13:00One is, one of the key principles of economics is, again, is it fair, no?
13:05Is the policy fair?
13:07And given that, no, the government is always on a, always has the national wealth, should always have the national
13:17welfare in mind.
13:18And you talk about the quality of the jobs, okay?
13:22That brings us to an important, also, question when we talk about economic planning.
13:30One is, where do you use resources and what sectors do we develop, okay?
13:36And that's actually, again, another key challenge facing the economy right now.
13:46Because, you know, we, the Philippines is, and the whole world is actually going through a technological transformation.
13:54So, it's led by, recently, it's led by the AI.
13:59And, and we, here we are in the Philippines, and we have a huge service sector.
14:05We have the BPO's, and we have a huge sector involved in, a significant sector involved in agriculture.
14:14We have, we have so much area devoted to agriculture, and we have so many, we are, we have, we
14:21are endowed with minerals, no?
14:23So, these, when you're a planner, an economic planner of the government, you're faced with all these choices, no?
14:29And, again, you have to sit down as a planner and think that, given all these developments, you have the
14:36tech side.
14:36We have, on the other side, on the other hand, the strengths of the Philippines and the resources we have,
14:42minerals, we have the agriculture, we have the significant sector in agriculture.
14:47At the same time, we have the BPO's, no?
14:49One of our key strengths is the English-speaking population that we have.
14:54So, these are actually all factors that have to be taken into consideration by the, by the economic planners.
15:02And, again, if you're going to ask the quality of jobs, no?
15:06The one is, the planners have to really assess how to make the best use of technology as it's being
15:16developed, which is AI.
15:17And how can you meld that with our strengths, no?
15:21Being in services, in BPO, in agriculture.
15:25So, because AI and technology can also be used to vastly improve the output of agriculture.
15:34And so, that's the challenge now that the government is facing.
15:40So, my answer to that is it really involves sitting down and really melding, taking advantage of technology.
15:49At the same time, taking stock of what we have and how, finding out how to marry the two and
15:58move forward.
15:59Now, among the jargons that are being surfaced, although this is not exactly entirely new,
16:08but among the jargons that are being surfaced is the 4P, no?
16:13The Pantawid Pamilyang Pilipino Program, which is a conditional cash assistance.
16:20Once and for all, because it's generating mixed conversation, especially in social media, no?
16:26Once and for all, do you believe, Prof, that 4P was also a significant or an effective ladder, no?
16:35That has moved Filipinos from poverty?
16:42Okay.
16:43When we talk about cash transfers, no?
16:47And definitely, it, of course, addresses an immediate need, no?
16:54When you talk, especially in the poverty level, and, you know, the statistics have it,
17:00the latest statistics show that we're at the 15% poverty level, no?
17:05That translates to a huge number of Filipinos who are in poverty, about 14 million.
17:15I believe it's 14 million Filipinos.
17:18So, a huge number.
17:19When you talk about these similar programs, of course, it addresses an immediate liquidity need.
17:27And there's no question, we all see that, that there is really a problem.
17:32And that's also led to the growth of the, and that's why there's been this growth in the micro-lending,
17:39no?
17:39In that space, that people are so tight on their daily needs that they, unfortunately, have to resort to these
17:47means of sustaining themselves,
17:51like the micro-lending or the informal side, which is the 5-6, no?
17:57Which we really want to get away from as much as possible.
18:02That would be the, ideally, if there was, we would want to see a situation where there's no 5-6
18:06around,
18:07and that everyone has access to more formal credit and credit on an interest rate, which is more reasonable.
18:21So, anyway, regarding that, it addresses the immediate need of the liquidity.
18:27But I think we have to think, the planners also have to think for the long term,
18:33that how do we help people help themselves?
18:37And this will now go down to the discussion on education.
18:42So, education, because of education, people will be able to arm themselves and stock themselves with knowledge
18:57and make themselves now more valuable and be able to be more skilled and now be able to earn a
19:06wage.
19:06So, in the short term, it certainly has a role, the cash transfer.
19:14But for the long haul, we have to think of a structural improvement and a strategic improvement,
19:23and that's going to be education.
19:25Education is key to getting the country out of this economic,
19:32and you might even say the moral issues that we face now.
19:38If we all, if the education sector is able to play a key role in the development of the people's
19:49values,
19:50and they also, people are, again, have obtained the necessary skills through education,
19:56then that's a great step forward for us.
20:00Actually, education, employability, employment, these are actually portions of the country's gap that are closest to me.
20:09But before we get into the prof, you mentioned something about structure.
20:14How about, do you think it makes sense, or if it's already happening, you can also educate me,
20:20but do you think it makes better sense that instead of measuring the four-piece success, for example,
20:30instead of measuring it according to the number of beneficiaries it served,
20:36do you think it's already about time that we also measure how many of these assistants actually resulted to a
20:45certain number of graduates,
20:47profits, or a certain number of people who are eventually, who have gained eventually better employment opportunities?
20:57And the context of that profits, because I see, and correct me if I'm wrong,
21:01the usual measures, Mangud, that I see with government is always the number.
21:05Like, for example, if we talk about Tesla, it's the number of people trained,
21:08but not necessarily of the number of people that they trained,
21:12how many of them actually have seized work opportunities that has improved because they took the test of the course?
21:22So I'm also using the same for four-piece.
21:25Do you think it's about time that instead of, oh, we have a number of Filipinos who have availed with
21:30four-piece,
21:30but of this number, how many of them actually have graduated
21:33or have been employed with better opportunities this time around?
21:40Yeah, definitely.
21:44What you pointed out is absolutely correct.
21:46There must be a monitoring mechanism to see how programs work out over the long haul.
21:56It would be, it would really, it would, that is really the ultimate goal.
22:03What is the final, how people are finally placed.
22:08So definitely, what you pointed out is critical.
22:12That there must be a constant monitoring mechanism to see how the funds are deployed
22:17and the usage and how people are able to use these funds
22:23and finally get to graduate with these funds.
22:28So definitely, that's something that should definitely be given priority.
22:36And now let's move towards, and before we move into education now,
22:41let's move towards another measure that more and more everyday Filipinos are getting interested by the day.
22:50And I'm referring to, we covered a little bit of this earlier,
22:53I'm referring to GDP, GDP growth.
22:58And if my numbers here is still the accurate one,
23:03so it's slowed down from 5.4% to 2.8% if we compare it from the same period
23:12last year.
23:13And this is a slow growth compared to the growth that we've seen in the past.
23:21Do you see this, Prof, as a temporary slowdown?
23:25Or is this something that we will be seeing more and more in the months to come?
23:35Okay.
23:37A very good question and very relevant for everyone.
23:41We always ask, you know, again, one of the objectives of economics
23:49is to make sure that we're well informed of what's happening in society.
23:53And when we talk about economics, one of the key measures definitely is GDP.
23:59And I mentioned GDP earlier.
24:01When we talk about GDP of the Philippines,
24:05really, if you look at the GDP figures,
24:08the biggest driver of GDP in the economy is the consumer.
24:13The consumer comprises 70% of GDP.
24:17You know, the GDP has, again, the five components, you know.
24:22As I mentioned earlier, one is the consumer spending.
24:25Second is the government.
24:27Third is the business spending.
24:29Then you add there the exports and then you subtract the imports
24:33and that comes up to your gross domestic product, you know.
24:36And if of that figure of GDP that we have, you know,
24:39and the last year it was 23 trillion pesos, you know.
24:4570% of that was derived from consumer spending.
24:49So we are, when they say we're a consumer-driven economy,
24:53that's certainly true.
24:5570% is driven by the consumer.
24:59Now, this year has been particularly challenging
25:05for everyone in the world, not just the Philippines, you know.
25:09We have the Iran war.
25:12We have, of course, the most recently, the tariffs.
25:18We have the challenges brought about by AI, you know.
25:22And because of, going back to the Iran war,
25:24because of the Iran war,
25:25that we have now elevated oil prices, you know.
25:29So all very varying challenges
25:34and very significant challenges, you know.
25:36And it did affect our GDP.
25:38It's now down to 2.8, as you mentioned.
25:43For the year, you know, the government target is,
25:46we were aiming, the government has always aimed for 5% to 7%.
25:52We're not going to obtain that.
25:54If we go at this rate, we're probably going to hit less than 5%.
25:59So, but to be fair, you know, the whole world is affected, okay.
26:05But, so these are the challenges we do face.
26:09And we really have to, you know, adjust accordingly.
26:16Even our exchange rate right now,
26:17last night, yesterday, it was 61.41.
26:22The key interest rates of the central bank was at 4.75.
26:27So, they just raised it by 50 basis points recently.
26:32So, again, all these factors come into play
26:36and these do present challenges for the year.
26:41Hopefully, if there's some resolution with respect to the Middle East,
26:47that will, again, help ease the economic stress.
26:52And perhaps we can get back to some form of more normal growth next year.
27:04And, Prof, if we then combine it with, because growth is slower,
27:10and this is not, as you mentioned,
27:13this is not just isolated for countries like the Philippines,
27:17but at the same time, we're also seeing a high inflation.
27:21I think the number that I have here is 6.4%.
27:24If we factor these two together,
27:27what's the experience of an everyday Filipino be like?
27:32Well, we all experience it, DJ.
27:36And definitely, you know, the inflation is a key measure
27:43that must be addressed squarely by the government.
27:50If there's any measure that has affected voter outcomes, for example,
27:55it's really how they live each from day to day.
28:00And that's really measured by inflation.
28:04And what is the key driver of inflation now?
28:08It's one of the key factors now is the oil prices.
28:11Transportation comprises 9% of the inflation rate,
28:17but it's really because it's just grown by over 10% to 20%
28:25since the Iran war started.
28:28And the crisis started, the Iran crisis started Feb 28.
28:33So we've had almost three months of high crude and variable oil prices.
28:44So we're talking about what the consumer is experiencing.
28:47They experience it immediately in the pumps with the elevated oil prices.
28:53We see a diesel before pre-Iran was at the 60 peso level per liter,
29:00and now it's at the 90 peso level per liter.
29:05So that's one.
29:06And, of course, when fuel prices go up, LPG prices go up,
29:10that then impacts cooking, transportation across the board.
29:17And so it definitely affects all of us in an immediate way, in fact.
29:26So definitely inflation must be addressed.
29:30In fact, if you look at the BSP, the BSP's main goal is actually to watch the inflation.
29:40That's how important it is.
29:43And now, this actually brings us to another noise.
29:50No, not noise, but demand, rising demand.
29:53No, not necessarily noise.
29:55Rising demand for wage increase.
30:01Because it's actually perceived that this will help everyday Filipinos get through the challenges
30:12that's brought about a slower economic growth and also higher prices.
30:20And I think in Metro Manila, the first tranche is already in effect.
30:25And even here in Cebu, there is a pressure to increase the minimum wage.
30:33How does this truly help a person, a Filipino, and the economy of the country in general?
30:45Okay.
30:46Good question, DJ.
30:48And very relevant.
30:50One, to address inflation, one way the government can address that is by a wage hike.
31:01And that has been the case with the recent hike in NCR.
31:07And it's in two tranches.
31:09One tranche this year and the next tranche next year.
31:13But in economics, there's always a trade-off.
31:18When you increase wages, okay, there are also other effects that we have to consider.
31:26And there are what we call the stakeholders.
31:29So, one thing, it will benefit immediately, of course, the worker.
31:35And that's, of course, much needed and welcome.
31:39But you also have to now put on the hat of the firm.
31:43And if you're the firm, you now have an additional stress cost factor to consider,
31:51which is a hike in the wage, the daily wage.
31:55So, that has to be factored in.
31:58And that was not, you know, it was not probably factored in early this year.
32:04This was a very swift and probably, you know, it was done because, of course, there was a need.
32:14So, when we talk economics, we have to look at both the benefits as well as the costs.
32:20So, one benefit is the workers are immediately, of course, their paycheck is improved.
32:28On the other side, we have to think of the firms and think of how that impacts the firms.
32:33So, if you look at the firm side, the large firms are in actually a very good position to absorb
32:41this.
32:42So, the listed firms are in a better position to absorb this rather than the smaller firms.
32:49I think the question now is, what's the impact on the MSME firm owners?
32:55Which is majority, you know?
32:58Which is the majority.
32:58Which is the majority.
32:59Yeah.
33:00Right.
33:00And if you think about that and the MSME sector, they are the ones really struggling.
33:09We already talked about inflation earlier.
33:11And then now you have this wage hike.
33:14So, their cost on the transportation has increased as a firm holder, as an owner of a company.
33:20And then now you have the increase in the wages as well.
33:22So, as an MSME, these are costs that are quite significant.
33:28They are significant relative to the ability of a large firm to absorb this.
33:33If you're an MSME, it's much harder.
33:35And that's probably where there might be some net loss, and hopefully it's minimal, of people not being able to
33:47be retained because of this.
33:49So, when we talk about what's the impact of the wage hike, we actually have to weigh the cost benefit.
33:58And the government planners, of course, are always hoping that perhaps it's always a hope that the MSME, in this
34:08case, would be able to absorb it.
34:09Because if somehow the whole economy is able to absorb this wage hike, then, of course, it's wonderful.
34:18But if we are going to look at the effects, there's probably going to be some firms, particularly on that
34:26side, the MSME, who probably may have to make hard decisions as to whether they will continue to hire more.
34:33Maybe they were planning to expand and hire more.
34:36Maybe they will have to differ on that.
34:38And maybe think twice about hiring more.
34:42So, in that sense, there's also an impact on the ability to hire more, or maybe even a need to
34:49re-evaluate, and maybe not even be able to retain some people on that level.
34:56So, that's hopefully, across the board, hopefully it's a major net gain for across the board.
35:04So, as I said earlier, hopefully no one gets left behind with this wage hike increase.
35:10Hopefully, everyone gets to move forward.
35:14And by the way, Prof, correct me if I'm wrong, because I cannot exactly remember the percentage of MSMEs in
35:25the Philippines, but I'm sure it's over 90%.
35:30And so, and I'm surfacing it, and then correct me if I'm wrong, it's because these MSMEs are also part
35:38of the everyday Filipinos.
35:41Of course.
35:41And, yeah.
35:42So…
35:43Definitely.
35:44Yeah.
35:45Again, that's the challenge for the economic planners.
35:49There is inflation.
35:51There is the oil price hike.
35:54So, everyone is feeling the brunt.
35:57And one of the tools is a wage hike.
36:00But, you know, the magnitude of the wage hike has to be considered.
36:05And, again, it's usually large firms who are in a better position to absorb this rather than the MSMEs.
36:12So, it remains to be seen, DJ, how this is taken on the MSME level.
36:18And, you know, the other measure that will bear that out would be the unemployment rate.
36:24So, the planners also have to look at that carefully and see if the unemployment rate increases as a result
36:32of this moving forward.
36:34So, you know, looking at the data is very important as these policies are implemented.
36:42And now, speaking of the employees, this is the portion of the SONA in which people actually say this is
36:57the, for the lack of a better word, pampalubag loob.
37:00Because it is viewed to finally include the middle class into the priorities.
37:10But, at the same time, it is also said to pacify the campaign donors.
37:18And these are the MSMEs.
37:20And I'm talking about the increasing the tax-free income threshold from $250,000 to $350,000.
37:33Can you tell us also, Provo, I know this is way more complex to be covered in just this show,
37:38no?
37:38But, at least, can you tell us also how this could also impact everyday Filipinos at the same time the
37:47overall economy?
37:49Because I've also heard some people citing the disadvantage also of doing this.
37:56But I leave it to you.
37:58Okay, thanks, DJ.
38:01Again, as we go through the discussion, you'll notice it's always a question of what are the benefits?
38:08But then you will realize, and we all realize, there are always costs, no?
38:12Correct.
38:12And economics is all about trade-offs.
38:17So, you know, economics, when you look at the economics, it's really how to make best use of the resources
38:24you have on hand.
38:25That's why we say we economize.
38:28Okay, it's that simple.
38:30So, we economize.
38:32And as a national government now, there is a consideration.
38:39There's always a consideration how to equitably handle the tax, no?
38:45And that proposal to probably increase the level of tax exemption.
38:51Again, that's always something worth considering, no?
38:55Perhaps if it's reviewed, no?
38:58And perhaps if we tax more heavily the upper end, then maybe that tax on the upper end can compensate
39:07for any net loss of the government that is attained net loss in terms of taxes, no?
39:18Because when we decrease the taxes on any income level, you're giving up tax revenue.
39:24So, the question is, how do you compensate for that, no?
39:27So, if we give up tax revenue from the lowest segment, which is, of course, something noble and worth studying,
39:40always worth studying, what is the appropriate threshold to help people at that level?
39:45And the question is, how do we recover that, no?
39:48Do we recover it by taxing the higher income or the largest firms, no?
39:54And that's possibly one angle that we should look at, no?
39:57So, when we talk about giving a tax break on one side, it's always a question of how can the
40:05government sustain its programs?
40:08Because the effect of that is if you give up tax on one segment, then obviously programs of the government,
40:16some programs will now have to be affected unless the tax shortfall created by that tax break is now recovered
40:24by taxing other income groups or perhaps other tax means, no?
40:30So, not necessarily the largest income groups, maybe you can just have taxes on luxury goods, for example.
40:39So, there are many ways of dealing with this, no?
40:43So, to answer your question, it's always worth studying that.
40:48And really, it should always be reviewed as to what's the appropriate taxable level and enable people who really need
40:58the money the most
40:59to get, to retain as much money as possible.
41:03And that would be the lower classes.
41:04So, the upper level can absorb more.
41:07So, that's one side.
41:08Or the luxury goods or devices, for example.
41:11Devices like tobacco or alcohol, maybe they can be taxed more.
41:17So, again, these are just all options, but it's a question of being able to recover the revenues.
41:24And speaking of...
41:26Sorry, if I may add, again,
41:27we always, to the extent possible, the planners, of course, want everyone, the whole economy, to move forward.
41:34So, again, all these factors need to be taken into consideration.
41:39And speaking of revenue that could be used to fund government programs,
41:47we'll now move finally to education, employability.
41:51So, and if the viewers have followed this show for months already,
41:56they would be hearing me cite this stat every once in a while.
42:01I'm referring to the functional literacy of Filipinos.
42:06And it's actually at 70.8.
42:09So, that means we struggle with reading comprehension.
42:14But more than that, we also struggle with even following simple instruction,
42:20like filling out a form.
42:22And yesterday, I've also cited where we stand in PISA,
42:26in which we are either second to the lowest or lowest in the world
42:31when it comes to reading, math, science, and creative thinking.
42:34That said, do you think we're ready for the AI economy,
42:41which you've mentioned in the earlier part of the interview?
42:47Yeah, DJ, it's definitely alarming that we've,
42:52the statistics that you've mentioned,
42:54it's something that we should,
42:59the government should really, again, address squarely
43:02and put a priority on education.
43:05And we, you know, we want to rise in the rankings.
43:09We don't even want,
43:10and to find out that we,
43:13there's, you know,
43:15that our ranking has even been falling.
43:19This, of course, definitely should, is alarming.
43:22So, are we ready for the AI boom or the challenge?
43:28And that's why there's a need to step up.
43:32And again, the resources that the government has,
43:35has to then therefore be properly channeled
43:38into the courses and to skills
43:42that will enable the Philippine economy
43:45to take full advantage of all these changes.
43:50So, the question is, are we ready for it?
43:53And, you know, the,
43:56the, based on the statistics now,
43:59we, we probably need a lot of,
44:02we have a lot of ground to cover
44:04before we're able to take advantage of this.
44:07So, there's, we need to,
44:11to, the government needs to really make it clear
44:16that education is a priority
44:17and help people be able to,
44:22you know, enable,
44:24provide funding support
44:26for people to,
44:28to enroll in these necessary courses.
44:31So, you know, in,
44:34if you take a survey
44:35of, of the top department,
44:38of the departments that need to be funded,
44:40and I've taken surveys,
44:44small surveys,
44:45I always, I ask people,
44:48what, which departments do you think
44:51are the most important departments
44:53in the government that need to be funded?
44:55And that's relative to the,
44:58to the, given the scarce resources
45:00the government has,
45:02we have,
45:03the government of the Philippines
45:04has so many needs,
45:06is it defense?
45:08Is it infrastructure?
45:10Is it so much?
45:12So much, yeah.
45:13Yeah, and you know,
45:14the, the surveys that I've conducted,
45:16number one is always education.
45:18The people said that they feel
45:22that the department that needs most attention,
45:25most resources relative to the others
45:27is education.
45:29That was,
45:30so that's what's interesting.
45:31And that's been the case
45:33when I take these surveys,
45:34I've taken it over the past two years.
45:36It's small surveys,
45:37but it's, it's been consistent.
45:40Education's number one.
45:41So we can't emphasize that enough.
45:44And, and, and, and, you know,
45:47when we talk about education,
45:48it's not just about AI, you know?
45:50Again, I mentioned earlier,
45:51when we talk about education,
45:53it's also about values.
45:55If we are able to,
45:56if, if, if the,
45:57if we're able to talk about
46:00and inculcate moral values
46:03at the young level,
46:05the people will be able to discern
46:08as they grow up,
46:09they'll be able to discern
46:10and make choices
46:12based on good judgment.
46:13And then they will vote for the,
46:17for the people who they feel
46:19are really most appropriate
46:20to, to lead the government.
46:22So education will,
46:24will address these issues.
46:27And by the way,
46:28Prof,
46:29no, I'm,
46:29because I'm down to my last few questions,
46:32but I'm in really enjoying so much
46:35this conversation.
46:36when I'm missing my economics classes
46:38at the Ateneo Graduate School of Business.
46:40But before I let you go,
46:41let's talk about sibling comparison.
46:44And I'm talking about the,
46:46because the Philippines used to be the,
46:48what's my name?
46:49The, the favorite ASEAN child,
46:51you know?
46:52And arguably it's no longer
46:55the, the favorite as of the moment.
46:58And the new favorite is said to be Vietnam.
47:03No.
47:03Now, if we talk about manufacturing,
47:06for example,
47:07because it looks like they're also
47:08ahead of us now.
47:12And, and so what are they doing
47:16differently that we can learn from,
47:19no?
47:19Even if they're younger than us,
47:21but they seem to be already ahead of us.
47:26Good.
47:26Very good question, DJ.
47:28So when,
47:31when we are where we are,
47:33no,
47:33we have to take it in,
47:35we have to compare ourselves
47:38and have,
47:38and compare to competitors,
47:41so to speak,
47:42or other countries.
47:45And you're,
47:46you're right.
47:46Vietnam is,
47:47is one of those fast growing entities.
47:50You know,
47:50their GDP
47:51has been in the top
47:53one or two
47:54in the ASEAN,
47:56in terms of GDP growth.
47:57So one is,
48:00when you look at Vietnam,
48:02one,
48:02one theme that,
48:04that comes up is that
48:05there is a constancy,
48:08you know,
48:08and,
48:08and,
48:09and that there is a,
48:12there is a program
48:13that is followed through
48:15and not changed at whim
48:17by administrations.
48:19So the,
48:20the,
48:21the constancy
48:22and stability
48:23of their programs
48:25really help.
48:26In the Philippines,
48:28we,
48:28with the,
48:30with every change
48:30of administration,
48:32there is always
48:33some
48:34significant change
48:36in,
48:36in,
48:37in priority,
48:38or maybe there's
48:39some new crisis
48:40that comes up.
48:41So
48:42in our case,
48:44we have not had
48:45that level of stability
48:48and consistency
48:49and purpose,
48:51you know,
48:51that Vietnam has had.
48:53And,
48:53and so
48:56that bears fruit,
48:57you know,
48:57and,
48:58and,
48:58and you also talked
49:00about education earlier,
49:02you know,
49:02so there's also,
49:04maybe it's worth
49:05looking into as well,
49:06you know,
49:06that what's there,
49:08what amount of,
49:09what percentage of resources
49:11do they
49:13allocate for education,
49:15for example.
49:15So
49:16these are things
49:17that we,
49:18we,
49:19that we really need
49:20to take stock off
49:21and,
49:22and
49:23ask ourselves,
49:24as you pointed out,
49:26not just with,
49:27with Vietnam,
49:28but just how do we
49:30maintain our competitiveness,
49:32competitiveness,
49:33and even go beyond that,
49:34make us really
49:36become the world-class
49:39players
49:40that we want
49:40that we want
49:41to be.
49:41And,
49:41you know,
49:42we all know
49:42that we were
49:43at that level
49:46years ago,
49:47now that we were,
49:47we had the first airline,
49:50we had,
49:51we were,
49:52we were the leaders
49:53in rice technology.
49:56So,
49:57it's really,
49:58we have that ability.
50:00It's just a question
50:01of,
50:01of our regaining
50:03that,
50:04that purpose,
50:05but as well as
50:06we really need
50:07that consistency.
50:08And,
50:09and if we are able
50:11to have that in place
50:12and we have infrastructure
50:14growing consistently,
50:15we have,
50:16uh,
50:17a good education program
50:19in place,
50:20no?
50:20If we have that stability
50:21in place
50:22and we grow
50:24consistently
50:25at five,
50:25six percent,
50:26no?
50:27Seven percent
50:27plus,
50:29then we're going
50:30to be back
50:31on track.
50:32Okay,
50:33so,
50:33challenges,
50:34it's really challenges
50:35and,
50:36uh,
50:36again,
50:37uh,
50:37we're all going
50:38through the,
50:38the,
50:40the,
50:40the crisis right now
50:42internally
50:42as well as externally.
50:44So,
50:44uh,
50:45but the important things
50:46we have to,
50:47um,
50:48really,
50:48the planners have to,
50:50uh,
50:50prioritize
50:51and then we all have
50:52to put our heads
50:53together and work together
50:54and then we'll get there.
50:56And much as I would like
50:57to talk about agriculture,
50:58but it looks like
50:59we're running out of time.
51:00So,
51:02that is one area
51:03that viewers
51:04should watch out now
51:05because,
51:06uh,
51:06that's,
51:07that's also something
51:07that I hope to cover
51:09more extensively.
51:10Hopefully,
51:10Prof,
51:11if you would indulge us
51:12in our next conversation.
51:15Definitely,
51:16sure.
51:16But before I let you go,
51:18if you can give,
51:20this sounds like,
51:21uh,
51:21Mr. Universe question,
51:23but,
51:23but I mean
51:24this question,
51:26I think this will
51:27have significance
51:28to our viewers,
51:30no?
51:30If you have
51:31one piece
51:31of economic advice,
51:33ba,
51:34to every Filipino
51:35household,
51:36regardless of where
51:37they are
51:38in the income bracket,
51:39what would
51:40that advice
51:41be for?
51:44Hmm.
51:46The economic advice,
51:48uh,
51:48well,
51:49when we make,
51:51uh,
51:52economic choices,
51:53we always want to
51:54think of,
51:55again,
51:56uh,
51:56what is best,
51:57no?
51:57For,
51:58for,
51:59uh,
51:59for ourselves
52:00and for the country.
52:01And,
52:02again,
52:03the,
52:04we want to make sure,
52:06as I said,
52:06that when,
52:07when we talk about,
52:08uh,
52:09the economy,
52:11for example,
52:11we want to make sure
52:12that no one's left behind.
52:13And so,
52:15uh,
52:16when we all make
52:17those small decisions
52:19of what's
52:20good for ourselves,
52:22how do we improve
52:22ourselves,
52:23And I guess that's
52:24maybe the key message
52:25I would have,
52:26no?
52:26If we are able
52:27to improve ourselves,
52:28no?
52:29By the simple way of,
52:30again,
52:31going back to education
52:32or by,
52:33um,
52:35you know,
52:36by,
52:36by being more efficient,
52:38for example,
52:39no?
52:39These are,
52:40when we do our small things
52:41in our small way
52:43and you aggregate
52:44all that together,
52:45112 million Filipinos
52:49improving themselves
52:50in their own small way
52:52and you aggregate
52:53all that,
52:54that actually
52:54adds up to a lot,
52:56no?
52:57So,
52:57my message is,
52:59uh,
53:00continue to look
53:00for ways
53:01to improve yourself,
53:02no?
53:03Uh,
53:04find ways to,
53:06by all means,
53:07go for education,
53:09uh,
53:10stay hopeful,
53:12uh,
53:12do your part
53:13and if we all
53:14do our part,
53:15when you aggregate
53:16all that,
53:18it can actually
53:19result in meaningful,
53:21more meaningful
53:21progress for us.
53:24So,
53:24that's it.
53:24Improve yourselves,
53:26uh,
53:26stay positive
53:28and,
53:28and we'll
53:29get closer
53:30to where we want to go.
53:31Well,
53:32as they say,
53:33Prof,
53:33we are the change
53:35we want to see.
53:37Yeah.
53:38Yeah.
53:39So,
53:39thank you very much,
53:40Prof Tony,
53:41I'm enjoying
53:42this conversation
53:43so much
53:44and thank you
53:45for making time
53:46to share your expertise,
53:47now,
53:48so that more
53:49and more everyday
53:50Filipinos like me
53:51would be able
53:52to understand
53:53our economy
53:53and how
53:54we can participate
53:55in making
53:56our economy
53:57and our country
53:57better.
53:58Of course.
53:59Thank you very much,
54:00DJ.
54:00It's been a pleasure.
54:01Yeah,
54:01thank you.
54:02so that's
54:03Professor Tony
54:04Jacinto.
54:05He's a Distinguished
54:06Banking and
54:07Project Finance
54:08Consultant
54:09and Professor
54:10at the Ateneo
54:11Graduate School
54:12of Business
54:12and just in case
54:13this conversation
54:14have made
54:16more people
54:18who are watching
54:19to explore
54:20the possibility
54:21of taking
54:21your MBAs,
54:22then Ateneo
54:24Graduate School
54:24of Business
54:24actually has
54:25a campus
54:26here in Sabu
54:26and you have
54:27an option
54:27to take
54:28the Regis
54:29program
54:29for senior
54:30leaders
54:31and the
54:32standard
54:32program
54:33for those
54:35who are
54:36on their
54:36way
54:37to move
54:38up the ladder
54:39in whether
54:40it's in their
54:41own business
54:42or whether
54:42it's in the
54:43organization
54:44that they
54:45are part of.
54:46So the
54:47economy is
54:47often discussed
54:49in percentages,
54:50charts,
54:51and forecasts
54:52but for most
54:53Filipinos,
54:54the economy
54:55is much
54:55more personal.
54:57Behind every
54:59GDP report
54:59is a family.
55:01Behind every
55:02inflation figure
55:03is a grocery
55:04receipt.
55:05Behind every
55:06employment statistic
55:07is a person
55:08searching for
55:09opportunity.
55:11Look deeper.
55:13Think better
55:14because headlines
55:15tell us what
55:16happens
55:17or what
55:18happened.
55:19Understanding it
55:20tells us why
55:21it matters.
55:23So I'm DJ
55:23Moises and
55:24thank you to
55:24Coffee First
55:25for supporting
55:27conversations
55:27that matter.
55:29This has been
55:29Beyond the
55:30Headlines.
55:30Have a good
55:31afternoon.
55:37It starts
55:38with a fresh
55:39shot of
55:39espresso.
55:41Bold.
55:42Rich.
55:43Bold.
55:44Just right.
55:46Then comes
55:48the milk.
55:48Steamed smooth.
55:50Creamy and
55:51balanced.
55:52The perfect
55:53latte is not
55:54brushed.
55:55It is crafted.
55:56One cup at a
55:58time.
55:58Your perfect
55:59latte is ready.
56:01Coffee first.
56:03Then,
56:03everything else.
56:04goodbyes.
56:05Goodbyes.
56:09Goodbyes.
56:18Goodbyes.
56:20Goodbyes.
56:22Music.
56:23I'm
56:24bad.
56:28Goodbyes.
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