Its nice to know a foreigner like this writer finds comfort in what President Aquino is doing when a lot of his country men don’t. Makes us natives think again how we should give him a little more credit than we give him.
Philippines won’t be cast as the sick man of Asia if Aquino has his way
18 February 2012
Read This Before the Stock Market Crashes!
It is often a fool’s errand to predict turning points in the more erratic Asian economies. Nowhere is that truer than the Philippines, whose greatest consistency seems to be disappointing the optimists.
With Europe sliding, America limping, Japan shrinking and the once-unstoppable China slowing, it’s anyone’s guess where the Philippines might be in three years. At the risk of looking foolish in, say, 2015, I think it will be in a far better place than it has been in a decade.
My faith rests on four things that Benigno Aquino has done since assuming the presidency in June 2010. These were moves that mark a keen understanding of what ails Asia’s 12th-biggest economy and flashes of courage that were absent in his three predecessors.
First, a nuanced focus on the economy. Gloria Arroyo seemed infatuated with raising gross domestic product during her tenure from 2001 to 2010. It was just talk. Arroyo, like Joseph Estrada before her, was all about the cult of GDP that beguiles many Asian leaders. This obsession masks big cracks in economies with headline-grabbing growth rates that serve mainly to deflect political opposition.
One in four Filipinos lives on fewer than $1.25 a day. The Occupy Wall Street movement harps on the 1 per cent. In the Philippines, it’s more like the 0.01 per cent of politically connected citizens who reap the spoils. Aquino wants to tighten mining rules, cut tax breaks and review contracts to make sure average Filipinos benefit from resources and limit the industry’s impact on the environment. He is upgrading infrastructure to attract foreign investment that would create jobs.
The President moved swiftly to get a handle on the long-term budget deficit. That’s a vital step to reducing the waste and graft at the root of the nation’s dysfunction but also winning the investment-grade credit rating that would accelerate the process.
Second, attacking corruption. Aquino, 52, is both the right guy and the wrong one to fight this battle. His mother was former president Corazon Aquino (1986-92), who made up with integrity what she lacked in governing skills. The problem is that the Aquinos are among the major land-owning families that benefit from the extreme concentration of wealth. Benigno Aquino has had no qualms in going after the billions that watchdog groups say Marcos looted. Marcos is the man Aquino’s opposition-leader father was trying to unseat when he was assassinated in 1983. The Marcos family has been staging a political comeback. Marcos’s wife, Imelda, now sits in the house of representatives.
The President is holding Arroyo, her husband and her son to account for alleged corruption. Aquino is also working to oust Supreme Court Chief Justice Renato Corona, who faces accusations that include favouring Arroyo in court decisions. While some smell an Aquino-versus-Arroyo family feud, I sense a bold effort to clean up the nation’s tainted judiciary.
Third, addressing overpopulation. The nation’s ranks are outgrowing the number of good-paying jobs being created, forcing more Filipinos to work overseas. Any talk of family planning is suppressed by the powerful Catholic Church, which is too politically active for comfort. Aquino risked the Vatican’s wrath with a “responsible parenthood” bill. Let’s hope more such steps are on the way.
The remittances that expatriate Filipinos send home boost growth in the short run. But the money does little to build a foundation for organic growth and is a dangerous addiction that must be kicked. Gaining control of the birth rate is a key part of the solution.
Fourth, a gutsy stance toward China. In Asia, it is striking to hear what politicians say publicly about China and what they really think. No one wants to anger Asia’s nascent military superpower or offend the biggest customer for their exports. Aquino is risking just that as he demands fairness in China’s claims to disputed islands in the South China Sea and cosies up to the US. The Philippines is among a handful of nations claiming the resource-rich Spratly Islands, along with Malaysia, Vietnam, Brunei and China. Aquino refuses to bow to China, which has enraged Beijing and prompted calls to punish the Philippines economically. Aquino is showing Asia there’s a way to approach China as a peer, rather than a subordinate.
Of course, the Philippines has demonstrated a unique ability to scuttle the most virtuous of cycles. All too often its eccentricities pop up to remind investors why it’s often called the “Sick Man of Asia”. This track record is a big reason why it is rated BB by Standard & Poor’s. But credit raters are perhaps too busy downgrading the top 10 economies to reward progress in the smaller ones. Investors who act in anticipation of Philippine upgrades are unlikely to regret it.