- About Us
- What We Do
- Sector Expertise
- Contact Us
Dr Filomeno Aguilar
The Philippine economy, for once, appears to be bucking the trend of a worldwide economic downturn. The end of 2001 brought rather positive macroeconomic data. The 2.7 per cent growth in the third-quarter gross domestic product (GDP) exceeded expectations. The slump in exports has been compensated by growth in the services sector, notably trade and telecommunications, particularly the mobile phone industry. The 3 per cent rise in GDP forecast at the beginning of the year appears achievable.
Based on third-quarter figures the unemployment rate, albeit high, stands at 9.8 per cent, a not insignificant dip from 10.1 per cent for the same period last year; the underemployment rate also improved from 19.9 per cent to 16.6 per cent over the same period. The number of labour strikes has declined. The inflation rate has tapered off. Total rice stocks have surged. Despite the slump in export-oriented industrial zones, total investment registrations have surpassed the 100-billion peso target for the year. Gross international reserves have been boosted. Fiscal discipline has reined in deficit spending substantially. To pump-prime the economy in 2002, billion-peso government debts to suppliers and contractors will be paid off.
Given the country’s massive problems of poverty, a chronic history of ill governance, and pervasive economic inefficiencies, the list of positive indicators deserves attention. The claim of President Macapagal-Arroyo’s administration of ‘substantial progress’ in fulfilling promises made in her July State of the Nation Address may not be an entirely empty boast.
But the business mood at the end of November showed a persistent lack of confidence. Apart from global gloom, local capitalists have expressed exasperation over the interminable political intrigues that have hounded Macapagal-Arroyo’s administration, and the unresolved problems of kidnapping and other destabilising factors. Business leaders have also scored the mass media for irresponsibility. In anticipation of the National Economic Summit (convened in response to Opposition Senator Blas Ople’s suggestion), they made the unrealistic demand that economics be insulated from politics.
However, at the Summit’s conclusion on 10 December, which saw the signing of a ‘national pact’ by representatives of various sectors, businesspeople have expressed satisfaction at the current administration. Agreement was reached on specific proposals presented by different pre-summit working groups. Among others, measures to deal with corruption and smuggling, increase public revenue, augment internal trade linkages, and effect a ‘level playing field’ were accepted for implementation within half a year. Because of a weaker global economy, and without being overly protectionist, the state and the bourgeoisie have decidedly turned to the domestic market, where growth in demand has lent stability and resiliency to the Philippine economy.
Macapagal-Arroyo appears to have acquired solid broad-based support and legitimacy. A November opinion poll shows her approval rating soaring to a ‘record high’ 53 per cent, with significant gains among lower socio-economic strata. If it were not for her controversial husband, pollsters say the President’s rating might even have been higher. A plus factor is the President’s firm support for the US after the terrorist attacks, and the ‘bonanza’ of economic assistance and investments received in return. Despite the charges swirling around the President, she is perceived as seriously combating corruption. Moreover, some trickling-down in the economy’s modest improvements must have occurred. Accustomed to hardship, the majority of the population does not expect dramatic changes in their lives, but incremental changes are noticed.
On controversial issues, however, inaction and deferral appear to be the preferred route. The many delays and court intra-murals have reduced Joseph Estrada’s case, at best, to a form of entertainment and, at worst, to a nuisance. The charges of narco-politics and other high offences levelled at Senator Panfilo Lacson have gone into limbo. The government continues to equivocate over the repatriation of Nur Misuari who fled to Sabah after his botched rebellion and was caught there, awaiting Malaysia’s de facto ultimatum.
The confluence of global terrorism and Muslim Mindanao’s grievances, interestingly, has borne fruit in a more inclusive stance by the Manila establishment. Jaime Cardinal Sin issued an unprecedented greeting to Muslims marking the end of Ramadan on 16 December. Also unusual is the President’s declaration of the following Monday a non-working holiday to celebrate Eid’l Fitr. A visual rapprochement between Catholics and Muslims was signalled on the front page of the country’s most widely circulated newspaper with a large photograph of Zamboanga Muslims praying in a mosque side-by-side with that of Metro Manila churchgoers in the first of a series of dawn masses leading to Christmas. These symbolic gestures are positively out of step.
WATCHPOINT: Will the Macapagal-Arroyo administration have the political will to pursue economic reforms that run against crony capitalist interests? To what extent can the economy remain resilient in the event of further internal or external shocks?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
Jan 16 2017 — Portfolio Investment in Asia 2017
Jan 16 2017 — COMPARATIVE OPERATING COSTS IN ASIA 2016
Jun 16 2016 — Emerging Markets As Investment Targets