A silver lining

There is a consensus that politics would weigh down our economic momentum this year. Finance Sec. Margarito Teves believes that 2007 will be a stressful year, but he was referring to the increased burden on revenue-generating units such as the Bureau of Internal Revenue and the Bureau of Customs to meet collection targets in view of the likely passage of the 2007 budget, after two years of belt-tightening under re-enacted budgets.

Economists and analysts are also worried that the mid-term polls might trigger overspending and corruption, not to mention violence – all of which spell disaster to our economic momentum, which is hinged in no small way on foreign investors’ continued and increased presence in the local economy.

But there is a silver lining to the May 2007 elections, as far as the Dutch financial giant ING Group is concerned. Its Hong Kong-based unit, ING Investment Management, has once again chosen the Philippines among its top-three investment sites in the Asia-Pacific region. This is the second straight year it has done so, which this year places us in league with Hong Kong and Malaysia among the hot picks in the region.

According to Paul Joseph Garcia, chief investment officer of ING Investment Management’s Manila office, about P5 to P10 billion could be pumped into the local economy this year, representing election spending by some 5,000 candidates participating in the mid-term polls and the national government’s infrastructure spending for the entire year as part of the 2007 budget.

Such spending would eventually boost corporate earnings, Garcia explained. For 2007, ING expects corporate profits to surge by about 20 percent. In fact, the Dutch financial giant’s investment outlook on the Philippines is buttressed by such expectations of higher corporate earnings and low interest rates. These, in turn, would further enliven the stock market.

Last year’s stock market high was just a taste of things to come. This year, analysts widely expect stock trading to exceed the heydays of the ’90s, when stock market indices were charting near 3,400 levels before the ’97 financial crisis brought it down to pip-squeak levels. But this year, according to ING’s Garcia, the Phisix (Philippine Stock Exchange composite index) could hit 3,500 to 3,700 by the fourth quarter. At the rate we’re going, that is certainly not farfetched. Just last week, the business pages were all ablaze with news that stocks had surged to their highest in nearly 10 years. And that was when the Phisix hit 3,070.29 points. Last Friday, the Phisix had inched up higher to 3,085.18 points.

* * *

Speaking of prosperity, one that bodes well for our growing middle class is that our call center industry will post the strongest growth in the Asia-Pacific region this year. A report launched last week by Sydney-based callcentres.net Pty. Ltd., recognized as an authority on the contact center industry, indicated that the Philippine call center industry will grow by 33 percent this year, with seats expanding from 105,000 last year to 140,000. In contrast, India and China – which are the two bigger Asian players than us – are expected to post growth at 16 percent and 22 percent, respectively. Thailand will also grow at our level, but it has a much smaller call center industry than ours with its 24,000 seats in 2006. callcentres.net Pty. Ltd.’s 2006 report covered six countries including Singapore and Malaysia.

This should further dent the unemployment rate this year, which as of October 2006 was down to 7.3 percent. Also, this will boost the spending power of our growing middle class – a big part of which comprises the families of overseas Filipino workers. Collectively, they are more capable not only of spending, but also investing in the economy – which could make the stock market a not-so-esoteric place for them from now on.

Given recently-released figures by the Bangko Sentral ng Pilipinas (BSP) showing that banks extended more loans to small borrowers last year, it is a cinch that consumer spending will continue to drive our economy this year – not only among the rich but also among the poor.

BSP Governor Amando Tetangco Jr. has revealed that more than 200 banks serviced 630,000 microborrowers, with total loan portfolio amounting to P3.7 billion in 2006. Tetangco noted that banks have changed their mindset about lending to the poor: microlending is now part of their agenda, which in turn does wonders in alleviating poverty all over the country.

For sure, it will be a bumpy ride from now until June, when the results of the elections will have been known. But the good thing about what ING has indicated is that the mid-term poll does have some built-in benefit: the spending will boost our economy.

But whether the electoral process and results would trigger investor flight – and thus clip our economic momentum – is something you and I will have to determine over the next few months. In this regard, the opposition – with its lack of platform other than the agenda to oust Gloria – has made the choice much simpler for many of us. Vote for the opposition slate if you want to be stuck in the quagmire of vindictiveness. Vote for the administration slate if you want more of the economic prosperity that has come upon us.

* * *

Ombudsman Merceditas Gutierrez has been in the political whirlwind lately with the perceived "selective" manner in which her office has been handing out suspension and/or dismissal orders against local government officials.

It did not help any that TV footages of the raid on the Iloilo provincial capitol, in connection with the Ombudsman’s dismissal order on Iloilo Gov. Niel Tupas, showed overzealous officers on a seeming rampage. It has since come to light that the raid was a high-risk exercise due to information that armed convicts and New People’s Army operatives were part of the crowd present in the provincial capitol. Too bad there seems to be no TV footage of these armed convicts and NPA goons, which could dissipate the perception of overkill.

Well, it seems the ombudsman will continue to be in the political whirlwind because there are some 200 cases involving graft and corruption charges that remain pending with her office.

* * *

Interior Sec. Ronaldo Puno pointed out recently that graft and corruption cases are not covered by the provision in the Omnibus Election Code that prevents the suspension of elected officials during an election season. The DILG secretary said if he gets wind of the list of respondents in these 200 or so cases, his office would send notices to these respondents so that they could answer the charges filed against them.

I believe Pasig Mayor Vicente Eusebio is one of those 200 or so respondents. If I recall correctly, the graft charge had to do with the operation of the shabu tiangge in Barangay Sto. Tomas, which was just a stone’s throw away from the Pasig City Hall.

The shabu tiangge was uncovered during a raid conducted early last year, which was a real shocker. But what became more shocking was Mayor Eusebio’s demolition of the shabu tiangge a few weeks after the raid occurred. Such brazen contempt for the law deserves the ombudsman’s attention. Since the drug menace has ruined generations of otherwise promising youth, Eusebio’s case deserves her immediate attention. And until she focuses attention on the case, Pasiguenos – and concerned citizens – will wonder if there is truth to her office’s perceived "selective" manner of handing out suspension and/or dismissal orders.

My e-mail: [email protected]