Source: Manila Bulletin, 24 January 2012
By Zoilo P. Dejaresco III
MANILA, Philippines — Something is disturbing about RP’s GDP growth rates between 2007-2010 – they only display spunk during election years.
Consider the record: during election years, they were 2007 (7.1%) and 2010 (7.3%) and only 2008 (3.7%) and 2009 (1.1%) in non-election years. Every man and his uncle know that government expenditures during those election years are now at optimum and often inflationary.
In 2011, spurred by an otherwise noble motive of “making every centavo spent worthwhile,” the Aquino government has been accused of “under-pending” to the detriment of economic growth.
That’s not likely to happen in 2012. Optimistic government forecasts like that of the DTI (Trade and Industry) of 7.8% is unlikely to happen even as most private think tanks point to any growth between 4.5%-5.5% for 2012. We feel, though, that a 5.0-6.0% GDP growth rate this year is not an impossibility.
Government is front-loading releases of the infrastructure budget, stretching its annual statistical impact even as P80-B or 10 of the PPP (Private Public Partnership) projects are to be bid out midyear with P457-M made available for pre-PPP studies and the like.
Private sector participation in the PPP is likely to enlarge with the biggies like First Pacific, SMC and Ayala, among others, going back to basics like railways, roads, energy, airports and ports. Wiser in investment portfolio choices, even schools and hospitals have been targets – in the same way government prioritizes its budget for health and education.
First Pacific has bought into high grade St.Luke’s Hospital and Makati Medical Center and schools like National University, Mapua Institute of Technology and the University of the East have been bought by tycoons. The Laurels had long owned the Lyceum University.
Consumption should accelerate if the two million new jobs created from June 2010 to December 2012 are in place as well as the BOI investments growth of +22% and the economic zones of +41% find fruition this year – creating new jobs definitely. Confident consumer spending spurs business to expand capacities and creates newer jobs further.
Job creation is of supreme importance-far better than the CCT (conditional cash transfer) which is really for health and education goals rather than a poverty alleviating instrument since the P 1,200 monthly subsidy falls short of the P 1,700 need to keep the necks of the poor above the poverty waters. But the doubling of the CCT from P 21 billion to P 40 billion will, by itself, certainly create positive ripples in the economic lake.
The Banking sector has taken the cue and the BSP has reduced overnight lending rate from 4.5% to 4.25% to spur business borrowing and egg passive depositors to get out of T-Bills and transform the market to a more active arena. The 4% rise in deposits to P 5-Trillion, a 4% growth from last quarter may merely reflect people’s anemia in spending and investment and is not always good for progress.
Confidence in the future prods consumers to spend and confidence in the PH sovereign risk does makes readily available foreign credit cheaper and saves the country billions in interest savings. The smashing performance of the stock market that has breached the all-time high ceiling, on the other hand, reflects the same kind of positive vibes from investors- short-term they may be.
How will other industries and sub-sectors fare?
Agriculture growth has been less than spectacular in recent years but genuine efforts of government for food self-sufficiency up to 2013 and the strict implementation of the 30% allocation of bank portfolio towards agriculture could be the genuine drivers of that sector. Manufacturing will be very “iffy” with China definitely enjoying wide economies of scale as to be totally globally competitive.
Exports which registered negative growth rates of 2008 (-2%) and 2009 (-13%) will be sensitive to the troubles brewing abroad like the softly recovering America and a Europe saddled in the throes of economic maladies- much like a dying dragon fighting for its last breath.
Sensitive likewise will be the OFW remittances (over US$20 billion annually) to the troubled Middle East and general global slowdown although the country is expected to survive the current election year efforts to ban outsourcing in the USA through English competence and medical transcription skills deeply embedded among our skilled translators.
Tourism is a dark horse with the exciting “It’s More Fun in the Philippines” out to lure 4.2 million tourists this year with great promise for investments in tour transport business (land, air , sea), adventure and sports site and the medical and beauty tourism. Franchises will continue to exhibit a significant 30% annual growth and would remain an attraction for moneyed individuals and OFW families with the business acumen.
Entrepreneurial gurus have pointed to changes and therefore new opportunities resulting from climate change disasters: Ondoy hit us with P 21 billion in damages, Pedring P 10 billion and Sendong we are still counting. People hit by those are thinking new crops and location in their aftermath. These are opportunities.
True to their reputation, food and telecom, are marked winners given the landmark acquisition deals and mergers in the last three years.
Last year, PLDT-Smart bought a significant share of Sun Cellular who in turn got a foothold in PLDT in an eye-popping telecom multi-billion deal. In 2010, it was beauty manufacturer Splash Corporation buying 80% of the popular food chain Barrio Fiesta for P 470M representing 80% stake while Pancake annexed the high-margined Yellow Cab for P 800 million. In the previous year (2009), food biggie Jollibee seized 70% of a 6-year old food wonder called “Mang Inasal” of Edgar Sia II for a whooping P 3 billion.
Generally, the signs are positive for a better than 2011 economic performance of the country’s GDP and the landscape is filled with new “sunrise” or “sunset” industries as the RP economy changes some character over time.
