By Miguel Raymundo
Far from the true picture of the economy that belies Malacanang’s assertion of economic growth, latest numbers imply that the economy is on the wane, a far cry from the still sanguine assessment dished out by those in power.
Bluntly, political scams are weighing down on economy’s prospects and how businessmen perceive them.
Take the gross domestic product (GDP) which measures the nation’s local output, which has declined over the past quarters.
From a high of 7.7 percent in the first quarter of 2012, GDP has gone down to 6.3 percent in the first quarter of 2013 and a disappointing 5.7 percent growth in this year’s first quarter.
As expected, officials heap the blame on the spate of natural calamities for the economy’s slump over the past quarters.
Finding fault, however, with the weather as the culprit of the economy’s woes may not be that accurate.
While the figures are quarterly, they nonetheless provide a glimpse into what has long bogged down the economy – uncompetitive, protectionist and corruption-prone.
Yearly, the Philippines aims to chalk up between six and seven percent GDP growth in its bid to make it one of Asia’s fastest-growing economies.
That projection takes into account the foreign exchange remittances of overseas Filipino workers (OFWs) which account for 20 percent of the annual GDP.
This year, prospects don’t augur well for a significant share of remittances to GDP due slowdown in this year’s first quarter as hostilities flare up in the job-rich Middle East, particularly in Libya, Iraq and Syria.
Moreover, certain policy and structural constraints still abound, one of which is the still unresolved 60:40 equity limit imposed by the Constitution on investors seeking to do business in the country.
While both Houses of Congress are receptive to striking out the archaic provision in the Constitution, it seems ironic that no less than President Aquino himself stands in the way.
In no unequivocal terms, he thumbed down any proposal to tinker with the basic law of the land, including its economic provisions.
Undoubtedly, the pro-Filipino but anti-foreigner equity ratio ceiling curbed the entry of foreign funds which only ended up in other hassle-free nations – Thailand, Vietnam and Myanmar.
Lack of infras
More often than not, prospective foreign investors bewail the government’s incoherent and unstable business policy, lack of infrastructure, particularly roads, ports and airports in the Philippines.
Yet, billions of pesos are allotted annually to finance the construction of highways, being the lifeblood of the economy.
Talk of corruption in the business circuit often revolves around the pork barrel scam, a major embarrassment to Aquino’s so-called tuwid na daan” program of government.
During the just-concluded World Economic Forum in Makati city, Finance Secretary Cesar Purisima was booed by activists for his upbeat assessment of the debt-plagued economy.
He was blamed for orchestrating the multi-billion dollar debt deals with the multilateral finance institutions, plunging the country deeper into a debt hole.
Not spared was Tourism Secretary Ramon Jimenez, a dyed-in-the-wool Aquino loyalist who was roundly assailed for giving tribute to Aquino’s “tuwid na daan” platform of government for the restoration of people’s faith in the government.
Contrary to what Aquino officials trumpet, critics believe that the recent growth in the Philippine economy was “artificial, narrow, debt-driven and unsustainable.”
Worse, it is accompanied by worsening job generation, growing unemployment and exclusionary growth, mainly in the narrow real-estate and construction sectors.
These sectors are supported by record-low interest rates, which have made financing for production and for consumption artificially cheap.
While it artificially increases economic activity, this situation of cheap financing is only momentary.
Filipino businessman, Manuel V. Pangilinan, whose group of companies operates toll roads, telecommunications firms, mining pits and power utilities, says while reforms are laudable, the government still needs to address many critical issues necessary for economic growth.
“Certainly, the soft spot of development is important – reforms, governance and perception of the Philippines – but there are hard parts of development as well. It can’t be all perception.” Pangilinan wants the government to cut red tape, reduce the cost of power and build more infrastructure.
For one, American financial services giant JP Morgan Chase has cut its 2014 economic growth forecast for the Philippines, noting that its first-quarter GDP results fell below expectations and turned out to be the slowest pace of expansion in 10 quarters.
It also revised its GDP growth forecast of six percent for the Philippines this year, down from the previous forecast of 6.6 percent.
As more and more analysts reassess their views on the Philippine economy, they tend to narrow down their verdict – that the much-hyped economic growth was but a flash in the pan.
Such labels as “Asia’s next miracle” and “Asia’s rising star” are all but empty advertisements meant to make the Philippines popular to investors.