From BusinessWorld 27 October 2011
INVESTMENTS are key to driving the country’s economy to grow at a faster pace, and infrastructure projects are needed to attract such funds, speakers at an economic forum yesterday said.
“If investments were to grow by 8% per year, we will jack up our gross domestic product (GDP) growth rate to 6%,” Antonio Jose U. Periquet, economist and former managing director of Deutsche Regis Partners, Inc., said in his presentation at a forum at Makati Shangri-La Manila that was hosted by Security Bank Corp.
“If 6% is maintained in five years, you will be looking at a domestic market 40% larger than it is today,” he added.
Total investments — which Mr. Periquet said consisted of both public and corporate funds — grew by just 3.2% in 1990-1999, a pace that even slowed to 2.4% in 2000-2009.
Investments generate jobs
John D. Forbes, legislative committee chairman of the American Chamber of Commerce (AmCham), said in his speech that resources like labor, environment and minerals are present in the country but there is a need for more infrastructure.
“If you can make infrastructure efficient and modern, then investments that follow will be efficient. The government needs to spend more,” Mr. Forbes said.
AmCham and the rest of the Joint Foreign Chambers of the Philippines have been pushing recommendations under the Arangkada Philippines, launched late last year, to make the country more competitive.
Mr. Forbes said Arangkada, which listed 471 recommendations, cited the need to generate $75 billion in new foreign direct investments from 2010 to 2020.
This, in turn, is estimated to generate 10 million jobs and P1 trillion in additional revenues for the government.
The Philippines has been a laggard in Southeast Asia in terms of foreign direct investments, Mr. Forbes noted.
He said the Philippines attracted only $1.6 billion out of the $40-billion foreign direct investments in the region from 2000 to 2010.
This pales in comparison with $19.6 billion in Singapore, $6.5 billion in Thailand, $4.7 billion in Malaysia, $3.9 billion in Vietnam and $3.8 billion in Indonesia, Mr. Forbes said.
Foreign direct investments to the Philippines in the seven months to July dropped by 9.7% to $805 million from $891 million the previous year, data from the Bangko Sentral ng Pilipinas show.
“Long periods of rising investments are typically preceded by periods of underinvestment where infrastructures are neglected and where businesses do not do enough and just maintain,” Mr. Periquet noted.
Current conditions, however, are conducive to business expansion, another speaker said in the same event.
“Interest rates are at all-time lows, corporates are in a very good state, return on capital is better,” Eduardo M. Olbes, executive vice-president of Security Bank Corp., said in the same forum.
Despite current uncertainties in Western economies, there are prospects for growth despite risks, still another speaker said.
“Growth remains positive in most foreign countries. Global expansion should remain intact, but there are some significant downside risks,” Jay H. Bryson, managing director of Wells Fargo Securities, LLC, said in his speech, noting China and the United States will still grow, though at a slower pace.
One development investors have been watching out for, however, is the euro zone’s plan, expected on Wednesday, out of the current sovereign debt crisis he added. — N. J. C. Morales