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Socioeconomic Planning Secretary Romulo L. Neri says
more foreign investors are now choosing the Philippines as an
investment destination.
He notes that net foreign
investment has increased almost five times from what we were getting
in 2003-06.
Bangko Sentral ng Pilipinas (BSP)
figures show that from a total of US$491 million in 2003, net
foreign direct investments (FDIs) went up to US$2.345 billion in
2006.
These impressive gains were won
despite the legal restrictions on land ownership and continuing
complaints of foreign businessmen already established here that many
things are wrong with the Philippine business environment.
They say we have an antibusiness
legal system. Our highways are antiquated, with EDSA and even Roxas
Boulevard—our capital’s primary roads—always in gridlock.
Corruption in government—and some say even in the private
sector—is pandemic. And there are many personal risks foreigners
have to be ready for in this country, where sometimes the kidnappers
and armed robbers are in league with the police and the military.
The administration is apparently
winning in its campaign to win more and more foreign investors.
Foreigners are now permitted to own 100 percent of equity in primary
economic sectors (except retailing and media ownership) and locators
in special economic zones are recipients of generous tax privileges.
The image of the Philippines has
also been boosted by seemingly unstoppable news about the triumphs
of the Philippine economy—thanks to the President and her economic
team.
The latest report says the gross
domestic product (GDP) increased by 6.9 percent in the first three
months of 2007.
Then came the report that the
unemployment rate has dropped to 7.4 in April.
The local stock market has been
on a roll, since it registered record highs last month.
The good news springs from the
support the overseas Filipino workers have been giving the economy.
It is they who are causing the pesos to be strong. A strong peso
allows the government to retire its outstanding loans early. With
less debts to pay, the budget deficit shrinks. And the government
can borrow money cheap.
Ironically the OFWs are also the
Filipinos who suffer the most from the strong peso. They have to use
more dollars, euros and pounds to buy their families food, shelter
and clothes and to pay for the children’s tuition.
Apart from the OFW remittances,
what caused the Q1 2007 growth?
The services sector grew by 9.1
percent. Financial services (which again OFWs and their families use
a lot of it) grew by 13.4 percent. The transport and communication
part of service also grew impressively.
The wholesale and retail trade
rose by 9.1 percent. Private services, including tourism-related
services, grew 8.9 percent.
Government services grew
remarkably at 7.1 percent. This was because of government
construction projects and services to the poor, like Botika ng Bayan
and schoolbuilding repairs, food for schoolchildren and such
subsidies.
Even industry grew by 5.3
percent.
And agriculture recovered in
January, February and May. Agriculture growth in the last quarter of
2006 was a dismal 1.7 percent. In 2007 Q1 growth in this sector was
4.2. This is a pitiful figure compared to agricultural growth in,
say, Vietnam. But this is only the Philippines after all.
Filipinos mainly bought these
products and services. Thanks to the OFWs once more. But thanks also
to the government, which had to consume a lot to be able to do its
projects. Government consumption was 13.1 percent.
The people who got jobs, even if
temporary ones, from government projects also became big consumers.
Personal and family consumption spending grew by 5.9 percent.
Exports also grew—by 9. 1
percent.
Domestic investment
WE need to grow by more than 6.9
to become the First-World nation that the President promises to make
us in the next decade.
Can we ever grow by the 9 to 10
and increasing double-digit levels to wipe out our massive poverty?
We can if we get more and more
foreign direct investments and tens of millions of tourists. These
will mean more Filipinos employed for higher wages. With more and
with more well-paid Filipinos, there will be more consumption and
higher growth figures.
There is something, though, that
is keeping the investment from soaring.
It is that we Filipinos are not
investing enough of our own money.
In the period we are discussing
investment expenditures almost had no growth. It was a mere
0.6-percent growth.
Aside from the Ayalas, the Sys,
the Tans and a few others, very few Filipinos have been plowing back
capital into their own companies and businesses.
Foreigners will continue to
hesitate to come here until they see that we are putting money in
our stock market and investing in our own companies.
Last April, when news broke about
large inflows of foreign investment into the country, Secretary
Ignacio Bunye wrote in his “The View From the Palace” online
column these thoughts:
“The expected surge in foreign
direct investments [FDIs] is certainly good news for the people
expecting more well-paying jobs, but we must continue to strive to
match this with a stronger trend of domestic investments.
“Filipino enterprise at all
levels must lead the trend for a nation we are building with our own
hands and our own vision.
“The stronger we can combine
domestic and foreign resources to grow the economy, the faster our
pace in joining the ranks of the First World by the next
generation.”
Very true. Very wise words from a
noneconomist.
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