Things should get better

DEMAND AND SUPPLY By Boo Chanco (The Philippine Star) | Updated May 4, 2015 – 12:00am

With one year to go before our presidential election, I am getting more and more inquiries from analysts working for foreign financial houses and even from embassy attaches what I thought about its outcome. They are interested in the political risk inherent in any major change in government leadership.

The intensity of interest is justified because we are now seen as a rising star. Perhaps, in the past they didn’t care much because we were seen as a basket case. With more of their clients’ money being invested here, of course they want to know if our kind of politics poses any real danger.

I immediately reassure them that things should only get better with a new administration. There should by now be a momentum for development that is supported by a new found confidence in our own abilities to deliver progress. The OFWs, for example, have stopped depending on government for jobs.

I get asked the inevitable question: what if VP Binay wins? I guess his reputation for corruption is the unspoken worry. It seems it is giving prospective investors second thoughts. It always takes everything in me to reassure them that they shouldn’t worry about Binay because the VP is intelligent enough to realize Malacañang is not Makati City Hall.

Then there is the age and possibly health factor. Binay will be 74 by the time the next presidential term begins. If he wins, he will be 80 by the time he leaves office and this should make him more conscious of his own mortality. Perhaps, and I must concede this is wishful thinking at this point, Binay will say whatever he might have been in the past, this time he will work for his legacy… bayan muna.

I know for many people this seems unlikely. Many would say, does a tiger change spots? But if he does, he is well equipped to deliver what the country needs and have been left in the wayside due to the extreme power of the economic elite.

That he comes from the ranks of the poor, helps deliver an orientation that should alleviate rising social tensions. What I worry about are the politicians around him. In a word, kadiri.

On the other hand, he also has the brains and the political savvy to out-do Marcos. That’s scary. We can only bank on his human rights background to reassure ourselves that he will not go as far as Marcos did in abusing human rights. But the risk is there… including a family political dynasty ready to perpetuate a Binay in power.

But I tell the analysts, they are likely to love Binay because there will be more certainty in policies and greater political will to carry out plans and programs, even the difficult and controversial ones. There will be no paralysis by analysis.

The Ayalas and the Makati Business Club group thrived all these years under a Binay leadership of Makati. I am sure the Ayalas are not fearful of a Binay presidency or they wouldn’t have announced billions of pesos worth of new long term projects.

Of course it would help if Binay came clean on all those corruption charges now, if at all possible. He should take Mareng Winnie’s challenge. There is just too much smoke to deny some element of unpleasant truth.

It is not enough to dismiss the accusations as politically motivated even if these are. It is also not enough to sound legalistic because we all know how many of our corrupt officials find shelter behind our legal system that is seen as being corrupt as well.

Anyway, some say even electing a dog as president wouldn’t dampen our country’s positive economic outlook. That is sheer hyperbole, but not without just a bit of truth. Unless the new president does something really stupid to alarm local and foreign investors, the momentum is there to sustain our economic growth beyond P-Noy.

Then again, it would help greatly if the new president does the right things to encourage more investments. There is so much money sloshing around here with nowhere better to go than sleep in low earning government debt papers and now going abroad. The local investors must be convinced first.

United Laboratories announced a major investment in Nigeria and Meralco is already there. Metro Pacific had been talking of investing in Myanmar. SM has been publicizing their investments in China. Indeed, there are more Philippine investments in China than Chinese investments here. Yet, China is the economic superpower.

Last week, ANC’s Michelle Ong interviewed UBS Managing Director and Senior Global Economist Paul Donovan.  Donovan has been with UBS for over 20 years and says he lives in an airplane, traveling 10 months a year, moving from country to country to talk about the global economy.

The Philippines, he said, will grow at a very reasonable 6.5 percent this year… “We think the Philippines will be growing roughly same rate as China…”

But he warns, “I don’t think that’s necessarily a benchmark we aim at… China has a falling population… so living standards work better than Philippines standards with a rising population. It’s not necessarily quite as good as the headlines might suggest.”

Donovan offers a better measure for our progress. “The longer time you spend in a traffic jam in Manila, the more inefficient the economy becomes. That’s the barometer we should be monitoring.”

Donovan insists we have to improve infrastructure, transport and communication. “Infrastructure is always a key part, at UBS we believe infrastructure is a growing part… We’ve got to make agriculture, transportation more efficient, communication more efficient…

“Those countries that lead in efficiency that are capable of using limited resources to the maximum possible effect are going to have a huge competitive advantage. That’s where the Philippines needs to put its effort.

“As it gets better growth, now is the opportunity to start contemplating how that better growth can be put to work, to help the economy overall…there are areas where infra spending could be improved, both in terms of physical infrastructure, and developing your communication, also in terms of developing human infrastructure and continuing the good work to build on skills levels in the Philippines.”

Donovan cites reasons to think things should only get better. “The Philippines I think is better presented as an economy with growth, with flexible labor, with a good level of skills and workforce…

“The domestic consumer spending has been remarkably stable here in the Philippines… The risk is if something happens to upset the domestic consumer. Maybe in the labor market, more likely I think on the credit side as credit moderation becomes more aggressive. If that’s the case, then the domestic side of the economy weakens a bit.”

He also pointed out the need for better skills training. He sees us “managing in an environment where demand for skilled labor is continually rising and therefore continually raising skill standards will be an important issue…

“This is achieving good infrastructure, achieving good levels of education, healthcare, of creating a strong sense of financial well- being. I would argue that the long term signal of Philippines success is not that we have Filipinos working overseas, it’s when people like me are begging to come work in the Philippines.”

I thought that ANC interview is a good summary of what is working for us now and what the new president should work on starting Day One. Our unfolding political extravaganza will do nothing more than provide our usual entertainment. But whoever is elected will be forced to make sure our wonderful potentials are realized. He or she would be stupid to reverse the tide.

Donovan made me feel I have been right to focus on getting DOTC and other infra agencies to deliver over the last five years. The utter failure of DOTC to do so has created an untenable situation, in the MRT for example, that should force the next administration to move quickly out of sheer necessity.

Our message to the world should be simple: don’t worry about so called political risk surrounding our 2016 election. Whoever gets elected must go with the momentum for growth or face the anger of an increasingly involved and connected citizenry at all levels of society.

But just to make sure, it is still our duty to vote the candidate we feel is best able to deliver. It wouldn’t hurt if we elect someone who can also inspire us to greater heights.

For now, neither Binay nor Mar Roxas seem to fit the bill and electing either of them only means we have settled for second best… We will survive but we are allowing puede na rin mentality to reign as usual.


Source: https://www.philstar.com/business/2015/05/04/1450865/things-should-get-better

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