By Geraldine Bulaon-Ducusin
“We really need to move away from inefficient energy systems, inefficient technologies.”
This is according to Dr. Lawrence Dacuycuy, chair of the National Research Council of the Philippines (NRCP), Division of Social Sciences of the Department of Science and Technology (DOST) and one of the resource speakers in the Expert Class webinar in “Gas Prices Rising Amidst Ukraine-Russia Crisis,” conducted by the DOST-NRCP.
Dacuycuy explained that it will not be easy to sustain growth due to several constraints that people need to be mindful of, and one of them is the capacity of the energy sector to supply the energy that people would want so that the economy will grow.
Also, there’s a need for the government to focus its energy, in terms of transforming the economy in modernizing certain sectors that are strategic, like services, manufacturing, at least to sustain industrialization at this point, and to acknowledge the presence or the importance of the fourth industrial revolution and technologies.
Dacuycuy cited the policy approaches of Germany and Portugal, wherein Germany became an export powerhouse because of Russian gas. They partnered with Russia to stabilize their energy needs, while Portugal invested in technologies that would allow them to no longer be that dependent on Russian oil.
That is policy anticipation, when Portugal thought it’s not good as far as the national security is concerned to be solely or largely dependent on foreign supply.
If the Philippines is going to transform its economy, it is imperative for it to seriously consider gradually shifting away from fossil fuel for sustainability.
“We have to broaden the economic frontier. We have huge reserves in the West Philippine Sea, but then there’s a political process that we need to observe. But that’s one way for us to push our economic frontier, otherwise, we will be dependent on foreign resources,” Dacuycuy explained.
It must be considered that inflation is contagious. It is no longer completely domestically determined, meaning, there may be shocks coming from other countries, so there may be cause-shocks introduced by their failure to adjust to certain turbulence that may interact with price shocks, especially now coming from the Ukraine-Russia crisis.
“So, if you’re the policy-maker you really have to at least acknowledge that there’s a possibility that foreign shocks get transmitted to the Philippines because the Philippines is an open economy, so we really have to be mindful of how foreign government interventions are transmitted to our economy,” Dacuycuy pointed out.
The economist added that many governments will say that they don’t intervene in the foreign exchange market, but they do, especially when they have large reserves, they do intervene. So, the problem that is being observed now is that the federal reserve in the United States has been quite aggressive in activist’s monetary policy. This translated to the dollar’s strengthening at the expense of highly indebted countries and at the expense of developing countries that are highly dependent on imports.
“Before they’re not mindful of this, but then they were stunned by the criticism coming from India.” Dacuycuy said on the current strengthening of the dollar against the Philippine peso and other currencies.
An over-valued currency does not necessarily mean that the currency is of good standing. There is a need to analyze on a case-to-case basis. For the Philippines, there is really a need to strengthen the way it reacts to inflation because inflation has real effects.
“That’s why it’s good to observe the strengthening of the Philippine peso because it’s really bad if the peso continues to weaken,” Dacuycuy said.
The DOST-NRCP is a collegial body of highly trained and productive scientists and researchers addressing the demand for knowledge, skills and innovations in the sciences and humanities, a way to effectively and efficiently contribute to nation building and improvement of the quality of life of the Filipino people by 2025.