Doing business in PH, stocks’ ‘bullish mood’

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Ej Lopez

Ej Lopez

Newspaper reports reveal what is supposed to be the biggest strength that any country could have in terms of positive business impressions. Or the business sector never had it so good in terms of confidence and never had it so high in their trust of the government.

Reports said that, “Business confidence soared to a record high in the second quarter, the Bangko Sentral ng Pilipinas [BSP] yesterday said, buoyed by the midterm elections as well as the country’s newfound investment grade status.” The relatively successful conduct of the last election added to the injection of funds from election-related expenses, which helped sustain the economy positively.

President Benigno Aquino 3rd’s trust rating has been very resilient despite continued “brick-batting” he has been getting from the opposing camps critical of his administration.

If only for that very high confidence rating, he deserves the accolade that made the economy grew because of his rather firm and straightforward leadership. Despite the diplomatic dilemma brought about by conflicting geographical and historical claims of territorial rights with China, this did not deter the unwavering perception and support for our economy.

The Philippines ranked 138th out of 185 countries in terms of ease of doing business, a fairly poor performance in terms of being investment friendly locally or otherwise. Ease of doing business is an index created by World Bank, of countries’ optimal level of business regulations. According to the source, “The ease of doing business index is meant to measure regulations directly affecting businesses and does not directly measure more general conditions such as a nation’s proximity to large markets, quality of infrastructure,
inflation, or crime.”

Judging from our ranking (138th) among countries, we belong to the lowest 25 percent of the countries with the poorest investment regulations and therefore less friendly to investors, thus less likely to be invested on.

This seems to be one of the reasons why despite the President’s overseas official trip in several countries, no hard investment has been realized except for pledges of support and assistance. The local economy lacks hard economic indicators that will complement the political stability established by the existing leadership. The resolve seems to be simple in addressing this nagging problem of attracting investment to the local turf. Yet no authority seems to bother look and address this quandary, which if given due recourse could turn the tide of investment in our favor.

If we solely rely on the President’s high trust rating but doing nothing to gain materiality toward achieving permanent growth by improving other areas of concern, this positive impression may soon disappear without any positive outcome or benefit to local economy.

Although there are reasons to be elated as regards to the article of the Asian Journal saying that the Philippines being the “darling in Asia,” investments that are about to pour in are export processing in nature. This is a tremendous boost toward achieving a growth status, despite what we are aspiring for is growth that would require more permanent structure, which is foreign direct investments, or FDI.

Shares market to remain moderately bullish
Despite the good news of improved economy in the traditional growth areas like the United States and other “ivy league nations” in Europe, the local bourse remained resilient in the past two weeks. This is because of several factors both internal and external.

Although the news of economic recovery in the Western and European regions created “jitters” to the local market because of possible exodus to the United States and European market, it was not, however, that significant to cause major breakdown in the local bourse.

The local market’s resiliency was complemented by high business confidence that has characterized our economy the past year, and has put us above water in our quest for economic stability.

This tradition of “bullish trend” that has typified our local shares market for nearly three years is expected remain and continue until the end of the year. The market has already endured the worse, in terms of world economic letdown. It seems that the worst is over in the US economy, and despite the possible exodus of local portfolio to the US growth areas, the macroeconomic performance of the country is geared toward sustaining its growth.

The local inflation rate remains calculated at 2.9 percent in the first quarter of this year, a proof of stability of our macroeconomic fundamentals relative to the demand and supply movements. Although unemployment remains relatively high at 7.5 percent, the local economic arena’s potential for growth is so vast that it can address the continuing impasse of both unemployment and underemployment that exist in any economy, developed or otherwise.

These and a host other positive indicators both internal and external to the local economy will continue to provide assurance of stability to the economy. Another confidence boosting to our thrust of attaining the “tiger status” is the continued positive ratings from reputable foreign credit raters. This phenomenon of consistent growth will hopefully continue until such time that we find ourselves in the company of “blue chip” economies that were later on dubbed as the “tiger economies” of Asia.

For comments email: doc.ejlopez@gmail.com with cc to: opinion@manilatimes.net

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