HAVING averted a fiscal crisis by implementing key reforms, the Philippine economy is doing very well according to the latest World Bank assessment. The challenge, however, is how to translate these gains into jobs and investments.
That is a problem that the administration of President Gloria Macapagal Arroyo has, until now, not been very good at solving. While it is true that the Philippine peso is at an all-time high against the US dollar and government revenue from tax collections, especially after the implementation of the 12 percent value-added tax in 2005, has improved a great deal, the Arroyo administration still has not figured out how to increase both foreign and local investment in the economy. These are badly needed investments that would mean more jobs for the ever-growing number of Filipinos entering the job market every year. Already the Philippine economy is disproportionately dependent on the 8 million Filipinos working abroad who send home $12.8 billion a year. The government’s aim should be to start creating enough well-paying jobs at home so that fewer Filipinos would need to move overseas every year just to support their families. Filipinos have grown tired of too much political bickering and name-calling and yearn for a leader who can bring economic progress. The president’s economic team hopes to accelerate growth to 9 percent in 2009, but the key to that will be the planned $20 billion in much-needed infrastructure projects over the next three years.
Many investors, both local and foreign, are reluctant to invest in the Philippines because the country’s infrastructure seems to be crumbling. In contrast, Malaysia, Thailand and even Vietnam have surged ahead, boosted in no small part by the massive investments in roads, transportation, office buildings and investment zones that their governments have undertaken.
The long-delayed opening of Terminal 3 at Ninoy Aquino International Airport in Manila has in part been responsible for giving the impression that the Philippines is mired in bureaucratic wrangling that threatens to stifle all forms of business activity. It is now slated to open later this year and, when it does, will surely help improve the country’s image in the eyes of foreign investors.
But the main focus of government spending should be on expanding and improving the country’s road network, power transmission and generation, railway systems and bridges. One of the reasons that foreign companies are reluctant to invest in the Philippines is because of the poor roads, the old railway system and the lack of reasonably priced power.
Arroyo announced on Monday that Prince Alwaleed’s Kingdom Holding Company is going to invest $150 million to build a six-star beach resort in Bohol. This is a sign of Saudi confidence in the Philippine economy and is rightly being celebrated by the president. Arroyo needs to continue to engender such confidence in the Philippine economy and strive for increased investments that will generate jobs for local communities.
