Straight and narrow partBy Conrado R. Banal III
Philippine Daily Inquirer
The Aquino (Part II) administration simply must keep us in suspense regarding its 2012 economic report, due for public announcement on Thursday, although our leader Benigno Simeon (aka BS) proclaimed that “all of us will be impressed.”
In all likelihood, as officials of the Neda already hinted earlier, the report will say that the country exceeded the 2012 target of the administration, which was an economic growth rate of between 5 and 6 percent. OK, well and good, anything above the target must be impressive to our leader BS, who is still enjoying a high popularity rating, thanks perhaps to the public trust in him as a person, particularly because of his publicity line about the straight and narrow path. I only wish that we could say the same thing about certain guys in his Cabinet!
In the business sector, anyway, they are looking beyond the absolute number of the growth rate. Armed with their own economic research units, they already had a good idea of the numbers even before the Neda officials could make their official announcement. Look, boss, the stock market already discounted the “impressiveness” of the economic performance in 2012. Something else seems to be fueling the stock market run in the past few weeks.
Among seasoned investors, such as the forward-looking fund managers, the thing to watch is the much-anticipated promotion of the Philippines in the credit ratings of international agencies. The administration is promising to bring us soon to the rating known as “investment grade.” Since the market is moving up, investors seem optimistic about our chances in getting the credit-rating upgrade.
Still, the element of gambling is rather obvious in the market. Will we or will we not get the upgrade—something like that!
Thus, in the business sector, they are actually looking closely at the factors behind that—ahh—“impressive” growth rate. One of them was the poor showing of the economy in 2011. Due partly to the anemic spending of the government on infrastructure in 2011, as the DPWH held back on its projects, apparently because the DPWH head wanted to weed out corruption in the department, the economic growth last year was a pathetic 3.7 percent. To think, the growth rate in 2010, when the Aquino (Part II) administration came into power, was a much more impressive 7.6 percent.
In fact, all our neighbors in Asean did much better than we did last year, except perhaps Thailand, which was nevertheless still reeling from some internal complications called politics. In other words, the Philippine economy had a bad starting point in 2011, which in a way should only make its performance in 2012 look much better. There was certain magic in the comparison of numbers.
The Aquino (Part II) administration nevertheless succeeded in attracting more private sector investments in 2012. It was a hectic year for construction, for instance, as evident in the various condominium projects in the metropolis. For that matter, even the Board of Investments set an ambitious target of P400 billion in 2012, although the actual investments registered with the BOI fell short of the target by about P30 billion.
It was clear that the private sector seemed to be beaming with confidence last year. The extraordinary performance of the stock market was proof positive. And so when our leader BS reported to his “bosses” on his recent trip to Davos in Switzerland, where he spoke in the prestigious World Economic Forum, he crowed about the renewed interest among foreign companies in investing in the Philippines. Now, one survey done in the yearly WEF in Davos is the level of confidence among CEOs of the largest companies in the world. It seemed that, despite the improving world economic prospects, the level of confidence among the CEOs even dropped. Based on the announcement of our leader BS, such a diminished confidence among the CEOs hardly affected the Philippines. What did he say again—that they were lining up to invest here?
The administration also seemed elated by the big jump of the Philippines in the competitiveness rating of some 144 countries done yearly by the WEF. From 75th place overall in 2011, the Philippines moved up to 65th place. In business, the curiosity centers on what particular sectors of the economy are those foreign companies lining up just to invest here. Mining for instance is definitely out, since the administration virtually imposed a ban on new mining ventures. Look, there is still no bill in Congress to implement the provisions of the recent EO issued by our leader BS. No law, no mining license, period!
As for the manufacturing sector, let us not even talk about our labor cost, which does not exactly make us an investment paradise for manufacturing. Besides, capital intensive factories here continue to face big risks with our high power rates, for one, which are still the highest in Asia, not to mention our poor infrastructure that stymies manufacturing efficiency.
The administration of course was quiet about the WEF competitiveness rating on our infrastructure. Overall in infrastructure competitiveness, we landed in 98th place out of 144 countries, but it looks really bad in the breakdown. For instance, for road system we were at 87th place, for railroad at 94th, for airport at 112th, and for seaport at 120th.
In short, in all those important categories for competitiveness in manufacturing, we were not even anywhere near the average.
Perhaps infrastructure projects here offer the biggest promise to foreign investors, which after all require shiploads of money to pursue, money that our government does not have. We really need foreign investments in that sector.
The PPP (private public partnership) program of this administration for infrastructure hardly attracts interest among the locals. Only three groups so far are dominating the PPP scene, namely the San Miguel conglomerate, the Ayala group and the Metro Pacific group.
Where are the other big business groups, such as the taipans? It seems that the others look at the PPP with a legitimate concern. So far, the dominant groups in the program seem to be well connected in the Aquino (Part II) administration, if not directly to our leader BS, at least to a number of his Cabinet members.
Before they take part in the program, they must see in the PPP trending so far the much-ballyhooed straight and narrow path.