The California Public Employees’ Retirement System (CalPERS) currently has a modest $85 million in portfolio investments in the Philippines.
It is the largest US pension fund, with assets worth $172 billion. It provides retirement, health and other pension benefit services to more than 1.4 million members and more than 2,500 California public employees.
"With the impeachment proceedings over, the business climate has improved. The business community is responding well," PSE chief executive officer Francis Lim said yesterday.
Lim said the market has been encouraged by optimism that the expanded value-added tax (EVAT) will prove positive for the economy in the long run and will likely accelerate economic reforms.
Former CalPERS board member Willie Brown Jr. also expressed optimism that the Philippines will continue to be part of the pension fund’s investment portfolio because of the Philippines’ strong ties with the United States.
"CalPERS follows the leadership of the US government in dealing with foreign governments. During the last visit of President George W. Bush in the Philippines, he was treated handsomely. I don’t think that (the Philippines’ inclusion in CalPERS’ investment portfolio) will change as long as he’s president and we have three more years to go," Brown said.
"The Philippines may be safe for two or three years unless something major comes up on the political front. Investments in the Philippines (by CalPERS) are equal if not greater than any other part of the world."
Wilshire Associates, the consulting firm of CaLPERS, evaluated the Philippines’ viability as a destination for CalPERS investments using seven investment factors, including an assessment of its political stability, transparency and labor practices.
It also assessed the country’s domestic liquidity and economic volatility, market regulations, investor protections, capital market openness and transaction costs.
Malacañang officials say the economy is on its way to recovery as the political crisis swirling around Mrs. Arroyo is finally receding.
"There is no way (to go) but up. Political uncertainties have started to bottom out," Press Secretary Ignacio Bunye said, expressing "no doubt" that the Philippines would post the 5.3-percent economic growth targeted for this year.
He was referring to the five-month-old campaign by the political opposition to oust Mrs. Arroyo on charges that she cheated to win last year’s presidential election.
Last September, Mrs. Arroyo’s allies in Congress quashed an impeachment complaint against her over the cheating charges and she has stood firm in refusing to step down despite almost daily street protests.
Bunye said that despite the political squabbles, which have seen top economic cabinet members resign and turn against the President, her administration has remained focused on "our goal of more investments, more jobs and more livelihood opportunities."
He cited the strong recovery of the peso and stock market this week after the government implemented the EVAT, intended to address chronic budget deficit problems.
Earlier, the International Monetary Fund warned that the bickering between the Arroyo administration and the political opposition posed the greatest risk to the country’s fragile economy.
International credit rating agencies, Moody’s Investors Service, Standard and Poor’s and Fitch all downgraded the country’s credit rating outlook in July due to delays in implementing the EVAT.
Mrs. Arroyo is expecting the implementation of the EVAT will lead to a ratings upgrade soon.