Low but sure

The Philippine economy has become predictable, according to Tessie Sy-Coson, vice chair of SM Investments, the holding company of the SM group with total resources of almost P630 billion as of last March.

Actually, Tessie was one of only two Filipino business figures who were invited by Forbes magazine as guest panelists during its prestigious Global CEO Conference, the other being Enrique Razon Jr., chair and CEO of the port operator ICTSI.

Anyway, Tessie was part of the high powered panel that tried to tackle the sensitive topic on “economic growth,” or any prospect of it, even considering that much of the developed world (i.e. United States, Europe and Japan) has been suffering from what was described in the conference as “distressed assets” in the financial and real estate markets.

Asked for her views on prospects in the Philippines, Tessie said investors could not expect immediate big fat payouts from their investments in the country, but their investments would also be safe from any form of economic free fall and debacle.

“No surprises whatsoever,” she said, referring to the Philippine economic performance in the next few years.

To Tessie, who is also chair of the country’s biggest bank, Banco de Oro, the Philippine economy would likely enjoy mid-level slow-but-sure growth rates, without the dizzying pace of rapid fast growth seen in other developing countries—i.e. China.

It meant therefore that, finally, the Philippines would have ridden itself of the boom-and-bust economic cycles that plagued the economy during the past several decades, when its economic well-being relied on prices of its commodity exports such as copra, sugar, minerals, garments and electronics, making its economy vulnerable to the economic downturns in its export markets—mainly the developed countries.

As they used to say in business, when the United States sneezed, the Philippine would catch pneumonia.

By the way, the conference panel pointed at the developing countries in Africa and the still-booming China as surefire growth areas, which were the typical examples cited in almost any global business forum.

Still, the panel made special mention of the Philippines. Wow! For a change!

From what I gathered, when Tessie had the opportunity to make some small talk with members of the panel at the sidelines of the conference, she casually put in some good words on the Philippine economy, mentioning specific investment areas with good prospects.

Tessie later told me that one of her intentions in attending the Forbes annual conference was to try to promote the Philippines as a good alternative to foreign investments, because she actually felt bullish on the economy.

We all know that many business people, even big-time corporate executives and entrepreneur, enjoyed putting down their own country, as if they were simply masochistic or something.

In the panel discussion, anyway, Tessie told her audience of big-pocket investors that the property sector in the Philippines, for instance, might have missed the “recovery boom” in Asia following the financial crisis in 1997, but the slow recovery of the local industry made investments more attractive in the past few years.

According to Tessie, the run-up in the property sector, plus the bullish trend in the stock market, could be attributed to the business confidence that, in turn, stemmed from the policy of good governance in the Aquino (Part II) administration under our leader Benigno Simeon, aka BS.

There—the business sector apparently believed the sincerity of our leader BS in fighting graft and corruption during his term, although some groups would hope that such sincerity could have extended to members of his Cabinet, particularly in the DPWH and the DOTC.

Anyway, regarding the predictability of the Philippine economy, Tessie said the steady trend already showed in the past seven years, or since 2007, when the economy started to post consistent annual GDP growth rates of 5 to 7 percent.

What could explain such a consistency, at least to Tessie, was the successful weaning of the Philippine economy away from exports of commodities as the means to prop up the domestic economy. She noted that the economic growth in the past few years was fueled by consumption, because the spending power of the Filipinos has somehow improved.

Actually, the high consumer demand was the result of the increasing BPO earnings, estimated to reach at least $20 billion this year, and still growing fast, plus the ever-reliable income of OFWs, estimated at anywhere from $30 to $50 billion a year.

Tessie noted that in the Philippines in the next few years, the GDP growth rate of between 6 and 7 percent would only be normal, as she did not anticipate trouble in the political scene, noting that democracy was already firmly in place in the country since the 1990s.

That is, well, despite the obvious partisan political preoccupation of our senators.

According to Tessie, even with the diminished political risk factor here (i.e. no more coup and well-planned move by some sectors to overthrow a legitimate government like the military-aided ouster of the man named Band…Wrist Band), the Philippines nevertheless must deal with the global ill effects of geopolitics, terrorism and economic downturn in developed countries.

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One worldwide trend that was noted in the Forbes CEO conference was the eruption of social unrest in various developed areas of the world, such as the “street protest” in Hong Kong, which according to one executive, was actually not about China and its restrictive policies on Hong Kong, but was actually a manifestation of the upcoming social unrest.

Underneath the Hong Kong protest movement was the fear of the young generation regarding their future. There would be a worrisome trend worldwide of the dwindling middle class in newly developed areas, because of the reverse migration of manufacturing from developing countries to the industrialized countries like the United States, Japan and Europe.

The return of manufacturing activities to developed countries would be the result of huge jumps in technology—you know, the break-through innovations in energy and robotics, which would give back the advantage in manufacturing to high-tech countries like US and Japan.

In other words, because of robotics, the high cost of manpower would no longer be a problem in those countries.

In the end, there would only be three economic classes, namely, entrepreneur, professionals (i.e. doctors and lawyers), and a mass of educated working class with no professional skills and thus jobless.

Thus prospects of high unemployment rates in many countries would lead surely to social unrest.

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By the way, for its 2015 global economic outlook, the World Bank released its survey on the ease of doing business in various countries, which showed that the ranking Philippines slipped from 154th to 164th.

To think, the survey covered some 189 countries.

Moreover, confidence in the Philippine economic has never been this high, as shown by credit ratings upgrade by the foreign agencies like Fitch, Standard & Poor’s and Japan’s Crediting Rating Agency.

Methinks the slip had something to do with the inaction and indecisiveness of some members of the Cabinet of our leader BS.