Political uncertainty has started to pummel both the stock market and the peso as we approached last weekend. This is unfortunate because despite the Arroyo administration’s lack of credibility, the business sector has somehow decided it is time to cautiously move on. In the stock market for instance, it was so far down that when some investors decided it can’t possibly go down any lower, it became the best performing bourse in the region.
I have long stopped being a fan of Ate Glo and I have often expressed extreme disappointment in her lack of leadership and decisiveness. But overthrowing her in a coup or another EDSA type event is a cure that is worse than the disease. I still believe that constantly mustering public pressure for her to get her act together is the best and only remedy available for us up to 2010.
We are stuck with her because unfortunately for us, we don’t have statesmen as leaders in this country. Look at Germany after the disastrous electoral showing of the ruling party in a region they had held for 40 years… the Prime Minister decided to call early elections. The German Prime Minister said he cannot allow the nation to go nowhere for another year until the regular elections. They don’t have the time, given the economic crisis Germany faces. That’s putting the nation’s interest ahead of a leader’s own. That’s statesmanship we can only dream of.
Still, precipitating a political crisis the way the opposition seems to be doing, can only be bad news for our struggling economy. The Asian Wall Street Journal observed in an editorial last week that "The Phippines is beset by such daunting difficulties – crushing poverty, an al-Qaeda linked separatist movement – that even the ablest government would have a tough time sorting things out…"
But, the AWSJ laments, "it is not just the presidency, but other key institutions – including the military and the opposition – that are making it difficult for the country to find an answer to such problems as 8.5 percent inflation and 11.8 percent unemployment." The AWSJ went on to list down the current jueteng investigations, the election tapes and calls for military juntas as adding to the general sense of emergency.
Many of the Philippines’ problems are real, the AWSJ concluded, and need responses. "Some of this other stuff just gets in the way of finding them." And we can only add, Amen.
Listening to JAZA, I must say he did a pretty good job of presenting the good news about the Philippines, without sounding like an ill-informed Toting Bunye. Nor did he sound like a perpetually brown-nosing Donald Dee or Sergio Luis Ortiz. JAZA’s presentation was reported in the May 27, 2005 issue of the Singapore Straits Times.
JAZA presented a comprehensive view of macro- and microeconomic indicators that seem to indicate the country’s economy is back on track towards economic health. Here is how the Singapore Straits Times reported the points raised in JAZA’s presentation.
First, the country’s GDP has been growing for the sixth straight year following the devastation of the 1997 financial crisis. Last year, GDP grew by six percent, one of the highest rates in 15 years.
Second, private consumption is progressively increasing, driven by strong inflows of overseas Filipino workers’ (OFWs) remittances. For the first quarter of this year, OFWs’ remittances reached $2.3 billion, up 16.6 percent from the same period last year. Thanks to OFWs who send a large portion of their income to families back home, the country’s balance of payments has been positive in recent years.
Third, exports have been growing consistently for the past four years, registering a 9.3-percent growth rate last year, amounting to a total of $39.6 billion. Foreign direct investments last year grew 409 percent, while local investments grew 76 percent, signaling renewed investor confidence. Also, existing foreign investors such as Honda, Texas Instruments, UPS, Fed-Ex, Panasonic and San Miguel Yamamura, among others, are moving aggressively to expand their operations and capacities in the country.
In February this year, the Financial Action Task Force on Money Laundering, an international multilateral group, removed the Philippines from its Non-Cooperative Countries and Territories list. As a consequence, portfolio investments started to flood in, amounting to $1.72 billion in this year’s first quarter, up from a mere $146 million in the same period last year. Improved investor confidence saw the Philippine Stock Exchange’s index hitting a five-year high last month.
Interest rates are on a downward trend, making business expansion more attractive. Corporate earnings across all sectors are demonstrating strong and steady recovery, surpassing their pre-1997 levels. Also, lead sectors that were liberalized during the Ramos administration – such as telecommunications, banking, property development and investment, food, beverages, cement, TV broadcasting and stock broking – are now experiencing mergers and consolidation. This is obviously healthy.
Fourth, tourists are also coming back, mostly from the United States, South Korea, China and Taiwan – driving growth in the industry and affiliated service sectors. Last year, 2.3 million visitors arrived in the country, finally matching the pre-1997 level.
All these indicators point to the fact that the Philippines is on the road to strong and consistent growth. Of course, not everything is rosy. Mr. Zobel de Ayala cited three major challenges that face the country: its fiscal deficit problem; the increasing cost pressures on the economy; and an expected slower growth of four to five percent for this year (but growth nevertheless)…
On the implementation side, the Bureau of Internal Revenue’s (BIR) April collection reached a historic high of P62.9 billion, P9.9 billion more than its previous record high of P53 billion last year. The new head of the BIR, Mr. Guillermo Parayno, is committed to improving the agency’s performance and reversing its reputation for corruption and inefficiency.
Clearly, things are looking up for Philippine businesses and the economy. The news is just not getting enough coverage. It is not as exciting as corruption, for instance. But the truth of the matter is that an accretion of evidence is adding up to a clearly rosier picture of the country’s economic health. So, no, the Philippines is not getting left behind.
I might add, no thanks to the Arroyo administration. We are still underperforming our potentials, and this is the source of frustration, which I am sure even JAZA would privately admit. We are a country of over 80 million people of proven world class talents, and we certainly can do a lot better. But the first step is getting our act together and prioritizing the things that matter.
I know the private sector had been trying to follow the Italian solution of making the government irrelevant to business. But I guess that is not possible in our situation now. We can only pray that our politicians, both in and out of government, realize the urgency of our situation.
Amy Pamintuan, our Executive Editor at PhilStar expressed our dilemma best: people want the corrupt to be punished, no matter how close they are – or rather, especially if they are close – to President Arroyo. But people are also worried that if the President is fatally wounded by the latest scandals, someone worse could take over.
With all the coup rumors around this weekend, I was hoping we would not shoot ourselves in the foot again, the way we did when Gringo Honasan led that 1989 coup. That coup definitely aborted our economic take off. And we are still grounded today because we can’t seem to shake off that vicious virus of extra constitutional change.
A cop pulls a guy over for weaving across two lanes of traffic. He walks up to the driver’s window and asks, "You drinkin’?"
The driver said, - "Well that depends - You buyin’?"
Boo Chanco’s e-mail address is bchanco@gmail.com