Minister of industry defends centralized government

Minister of Industry Robert V. Ongpin was justifying martial law in the Philippines. The nation, he noted, had had until the declaration of martial law in 1972 a two-party system of government, the only one in Southeast Asia.

"We had a very diffused and confused economic management. There was no direction. We had a number of fiascos. Every politician, for instance, anted a cement plant in his district. But now we have joined the club. We have a centralized, authoritarian government.

"The oil shocks made things difficult.If we had not had this authoritarian government, we would be in terrible shape. I think this government is pretty comfortable for the country. We think that this is a kind of government that suits us. The United States cannot impose its will on others."

Mr. Ongpin had a $400,000-a-year job as senior managing partner of an Asian accounting and management consulting firm, SyCip, Gorres, Velayo & Co., prior to taking on his present job at President Marcos' request. The Harvard Business School graduate apparently prides himself ad the tough executive, the decisionmaker, the man who is going to get Philippine industry moving rapidly and steered in a somewhat different direction. He sounds somewhat impatient -- perhaps even arrogant.

But, he's in a powerful position in a country where the government provides direction to a thriving private sector.

Mr. Ongpin notes that the Philippines is one of the richest countries in Southeast Asia in natural resources. It has mineral deposits, lush forests, and fertile soil. In terms of natural wealth, he says, it is second only to Indonesia -- only because Indonesia is a major oil producer. But, her argues, the Philippines enjoys fundamental advantages in terms of the skills and education of its people. And they speak English.

Nonetheless, he admits, the Philippines has lagged behind some of its neighbors economically. "We approached industrialization with a cautious, almost timid attitude," he says.

Mr. Ongpin takes an aggressive approach to industrial development of the 1980 s. He is taking his lead from President MArcos, who said after referring to the faster progress of Taiwan and South Korea, "Unless we shift gears today and get in the same fast truck, we will not be able to catch up, and we shall be left behild to choke in the dust of those we follow." Government strategy involves five elements:

* Accelerating 11 major industrial projects, including a basic steel plant.

* Encouraging exports, especially from nontraditional industries such as electronics and textiles.

Removing some of the overprotection of Philippine industry to make to more competitive in the world.

* Continuing to encourage foreign investment.

* Providing incentives for new industry to locate outside of Manila, the one major urban area in the nation.

The strategy is not without critics. Bernardo M. villegas, an economist with the Center for Research and Commuications, a private economic analysis group, says, "It would be foolhardy at this stage to rush headlong into the high-technololy, capital-intensive industries befre we have been assured of a sufficient supply of topnotch managers."

During the 1970s, the Marcos government shifted considerable resources into the agricultural sector. Mr. Villegas says that policy should continue because it is the best way to provide jobs for the nation's rapidly growing population, especially in the country. "Small-scale industries in the rural areas will flourish only to the extent that the farmers will be equipped with greater purchasing power that comes from improved incomes," Thus the food processing industry and other agribusiness should predominate in the 1980s, he says.

"Such a thrust will already exert a heavy strain on our national financial resources, both from a standpoint of needed public infrastructure and private investments."

Any resources available for manufacturing should be concentrated in high labor, export-oriented industries -- electronics, plastic articles, and textiles , Mr. Villegas argues.

Further hevy industrial investment should be delayed at least five years, he maintains. "Once we see our way through this anxious decade, we may have the sifficiently solida base to aggressively push the intermediate and heavy industries during the last decade of this century."

By contrast, Minister Ongpin wants to get the 11 major industrial projects at least "off the ground" over the next five years, though giving them an order of priority for launching. He makes these points in defense of the projects:

1. They are "economically viable."

2. They have been studied for years, some "for too many years." Meanwhile, inflation has been pushing up prices.

3. The projects will be financed in whole or in part by foreign firms or by foreign export credits with their typically extended grace periods, prolonged maturities and favorable interest rates. Thus, he says, the first significant debt service impact will occur only in 1984 when the nation's international payments should be in better shape.

4. The Philippines can handle its foreign debt, which amounted to $11 billion at mid-year. "What our critics fail to recognize is that, of that sum, fully 82 percent are fixed-term credits, almost all of which are long-term, with maturities of five years and beyond, making our debt servicing relatively comfortable." The ratio of debt service charges to gross national product was 18 .6 percent last year and about the same level in 1980, a level Mr. Ongpin regards as manageable.

5. Many of the projects are export-oriented, and, in some cases, will reduce imports. The copper smelter, the fertilizer project, the pulp and the paper project, the aluminum smelter and the cement industry expansion projects are all expected to export a large portion of their output.

In any case, Mr. Ongpin is pushing hard on the projects with some success. Their total cost: a conservative $6 billion.

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