Uneasy passage to 2020
How fast time flies!
It seemed like it was only last month when we welcomed 2019. In a few hours, it will be 2020.
For President Duterte, this means he has two and half years left in his term to deliver on his promises to the people. By the middle of next year, aspirants for the country’s top political posts would be gearing up for the 2022 elections.
Judging from past surveys, it is reasonable to expect the majority of Filipinos to be optimistic about the coming year.
The results of the 2018 year-end survey of Social Weather Station showed 92 percent of Filipinos were hopeful about 2019. For this year, Pulse Asia’s latest survey showed nine out of 10 Filipinos, or 93 percent, were looking forward to 2020 with hope and expectations of prosperity. The Philippine economy made decent progress this year. It grew by 5.6 percent in the first quarter, 5.5 percent in the second quarter and 6.2 percent in the third quarter. These growth rates compare favorably with those of our Asean neighbors.
The economic data for the fourth quarter have not yet been collated and analyzed, but the economic managers are confident the growth rate for that period would not deviate sharply from the past quarters.
They have expressed confidence the country’s overall growth rate for the year would be 6-6.5 percent, which is lower than the 6-7 percent growth rate they earlier announced.
Although the initial growth target has been pared down, there is reason to be thankful that, despite adverse economic conditions caused by domestic and international factors, the economy enjoyed a respectable growth.
Sadly, this otherwise positive development has been marred by events in recent weeks that have shaken the business community’s confidence in the sanctity of contracts entered into with the government.
In response to Mr. Duterte’s tirades against Manila Water Co. and Maynilad Water Services Inc., Metropolitan Waterworks and Sewerage System (MWSS) canceled its earlier resolutions authorizing the extension of the water concession agreements with the two companies.
The cancellation was crudely done. It was announced in the course of a congressional inquiry and without giving the two companies the opportunity to give their side on the matter.
In other words, they were blindsided. That’s a big no-no in an environment that supposedly operates on the principle of “rule of law” or on systems and procedures that require all sides to be heard before any action is taken by the concerned authority.
Those events unnerved the business community. The financial viability of the companies that had interests in the concession agreements was put in serious doubt. Their ability to service the debts they incurred became a cause for concern for their creditors.
As a result, the shares of the two companies and their principal local investors suffered from massive sell-offs. The reaction of the investors is understandable. They wanted to get out before the prices of those shares deteriorate further.
In an effort to counter the negative effects of the MWSS’ action on the country’s image before foreign investors, the administration went on “damage control” mode and said the concession agreements would remain in effect pending the renegotiation of their alleged onerous provisions.
Whether or not this assurance (if it can be called as such) would allay the concerns of the business community about the value of the government’s signature in contracts with private parties remains to be seen.
Although there is reason to be optimistic about the economy and business prospects in the country, this issue will no doubt be at the back of the mind of people who have existing contracts or are planning to enter into one with the government.
What a way to end an otherwise productive year. Goodbye, 2019.
Welcome 2020!
