BusinessWorld, 11 November 2011

DESPITE THE slowdown and uncertainties in advanced economies, Philippine economic growth can be supported by still robust local demand and consumption but there is a need for more private sector investments in infrastructure, an official of the Bangko Sentral ng Pilipinas (BSP) said on Friday.


“Intra-Asian trade now accounts for roughly 60% of our export and import receipts. This should provide a cushion to the Philippine economy since our peers in the region have relatively robust economies,” BSP Deputy Governor Diwa C. Guinigundo said in his welcome remarks during the 49th Philippine Economic Society annual meeting in Manila.

“The country is well-placed since sustained consumption in the private sector is expected to help take up the slack from reduced external demand from developed economy trading partners,” he added.

Emerging economies have been dragged by the troubles in advanced economies, particularly the debt crisis in the euro zone and the slowdown in the United States of America.

Mr. Guinigundo added that the “Philippine economy, though not immune, will remain relatively well-insulated from external shocks.”

Lower exports and government spending resulted in gross domestic product (GDP) growth of 4% in the first semester, way below the “fighting” target of 7-8% this year.

In October, the government cut GDP growth forecasts to around 4.5-5.5% for this year and 5-6% in 2012 against targets of 5-6% and 5.5-6.5%, respectively, used in the budget.

For its part, the central bank will keep the rise in consumer prices manageable.

“We will ensure that inflation will be kept low, stable and within target,” Mr. Guinigundo said.

Headline inflation picked up to 5.3% — reckoned from 2000 prices — in October from 4.6% the previous month due to costlier food and beverage products, utilities, and fuel, data from the National Statistics Office show.

But private sector investments, particularly in infrastructure development, are needed by the country.

“While policymakers are prepared to step up to the challenge, stimulating greater private sector participation in developing infrastructure and generating jobs therefore remains a key imperative for the medium term,” Mr. Guinigundo said.

Commenting on Mr. Guinigundo’s statements, industry experts said there are opportunities and challenges in the government’s public-private partnership (PPP) scheme.

“PPPs are challenging because of issues on incomplete contracts that are everywhere,” Aziz Haydarov, country economist at the Southeast Asia department of the Asian Development Bank, said in his presentation.

However, should the private sector take a chance on these projects, funding will not be a concern.

Funds parked in the vault of the central bank in the form of special deposit accounts climbed by 77.8% in the first nine months of the year to P1.62 trillion as investors found a lack of available projects to finance.

“The availability of the funding is not a constraint yet. It will be constraint when the PPPs in the pipeline are firmed out,” Mr. Haydarov said.

The government, for its part, is set to launch more PPP projects in the first half next year.

“We have the P1-billion vaccine self-sufficiency program with the Department of Health. That will happen in the first half next year,” Cosette V. Canilao, executive director of the PPP Center of the Philippines, said in an open forum.

The construction, operation and maintenance contracts for the Mactan Cebu International Airport’s new passenger terminal, the new Bohol Airport and Misamis Oriental’s Laguindingan Airport, and the establishment of a Common Automatic Fare Collection System for Metro Manila’s three light railways are also set in the first half, she added.

Since the PPP launch in October last year, only the P1.956-billion Daang Hari-South Luzon Expressway link deal has advanced, with 18 firms purchasing pre-qualification documents.

Ms. Canilao said the bidding for the Daang Hari road is set on Dec. 8. — Neil Jerome C. Morales