6.4%

Maybe they will blame this one on the Supreme Court too.

After all, Senate President Franklin Drilon has been saying the Court’s adverse ruling on DAP hampers government’s ability to spur growth. He says this even as government lawyers, arguing before the Court last year, said DAP was a completed program.

Our economic growth picked up from only 5.6% in the first quarter to 6.4% in the second. The target for full-year growth, on which are anchored the assumptions for the huge national budget we need to finance, is between 6.5% and 7.5%. If that level of growth is not achieved, and if revenue does not match expected growth, we will be forced to borrow more money to fund government’s expenditure plan.

At any rate, we can no longer crow about being Southeast Asia’s fastest growing economy. The honor is now Malaysia’s — notwithstanding the really bad things that happened to their national airline.

The low growth in the first half of this year is attributed to zero growth in public spending. Why this happened, the administration does not tell us.

It is unlikely we will ever hit the highest growth rate posted on the last year of the previous administration. The principal reason being we have reached the limits of our existing infrastructure — and no major infrastructure project has been completed by the present administration.

It is evident we have hit the limits of our infrastructure.

Traffic gridlock causes us to waste billions in fuel and lost productive hours. Congestion in our ports forced down our import growth and made it more expensive to produce anything in our economy.

The inflation rate ticked up alarmingly. The main reason cited for that is the added costs imposed by inadequate logistics. There is nothing in the toolbox of our monetary authorities to fix that.

By the end of this year, some experts fear that the metropolitan population will not have enough water. The drought expected to hit our economy’s center of gravity will further impair growth.

Almost certainly, we will lack electricity early next year. Not enough new generating capacity has been installed. As a prelude to rotating blackouts, power prices are expected to spike due to increased reliance on more expensive sources. This is not conducive to new investments.

In a survey of businessmen, the lack of infrastructure is cited as the leading disincentive to investment. That is followed by corruption, bureaucratic red tape and tax policies.

Our wage-earning middle class is the highest taxed in the region, a fact that depletes domestic demand. They now pay for the world’s most expensive power. Then they are asked to ride unsafe trains to work. In other societies, the shabby treatment of the working population would have sparked riots.

DAP did not solve the hindrances to economic growth. It aggravated those hindrances by commandeering public funds to buy political support rather than build strategic infrastructure.

Last week, Political and Economic Risk Consultancy Ltd. (PERC) raised our profile for political risk, mainly because of the possibility President Aquino would try to extend his stay in office. PERC sees this development as one that could cause political polarization.

Notwithstanding, Aquino refuses to close the door to term extension, saying he will still conduct consultations. That will further compromise our economy’s prospects for growth.

Valuation

The Bureau of Customs recently put out paid advertisements to demonstrate some progress in its collections.

Much of the improvements in BoC revenues, it appears, was due to upgrades in the valuation of imported merchandise. That suggests the BoC tolerated obvious undervaluation in the past. The good news is more and more imported merchandise are now more realistically valued.

Nowhere is improved valuation (and proof of previous undervaluation) more evident than in imported tobacco  — as seen in the BoC’s own published report. In some cases, the valuation of imported tobacco rose five-fold in just 6 months.

The new valuations enabled the BoC to significantly increase its revenue take. Whether it is worthwhile for the BoC to go back and review previous undervaluation is their call.

How gross undervaluation of imported merchandise could have gone on for so long is a marvel. Most of the key traded commodities — be they steel or tobacco — are tracked globally and reported on-line. The information is literally at the fingertips of Customs examiners — unless they try very hard to ignore the information.

The BoC has made much about recruiting new personnel the past few days. I would suggest they pay special attention to recruiting young people adept in information technology.

With a laptop and wi-fi, they could monitor the price movements of traded commodities globally. Against such freely available information, they could compare merchandise valuation declared by importers.

In this wired world, the prevailing prices of things should no longer be a mystery. It should not be anything that could be concealed from collectors of taxes and duties — unless, again, the authorities, for profitable reasons, choose to play blind.

Sometime in the past, the BoC hired a global firm to report the prices of imported goods at the source. That was an expensive contract, vulnerable to being scuttled by those acting on behalf of smugglers.

Today, we could do the work of global price surveillance ourselves using the internet. Nearly every sector of industry has a website reporting price trends. Nearly all foreign governments track trade closely and diligently report out their data.

The people at BoC are not the biggest fans of information technology. They should be, if they intend to do their work well.