Its all in the mind. With an optimistic outlook everything looks good despite the fact the economy growing less than the previous years and only 1 PPP approved. Something does not reflect reality here.
From BusinessWorld Philippines
March 06, 2012
Optimistic outlook touted
AN UPBEAT OUTLOOK on the Philippine economy is shared by the government and the private sector, with both yesterday putting behind them issues such as state underspending, public-private partnership (PPP) program delays and a growth slowdown.
“There is much optimism about the country’s growth prospects this year, despite headwinds like the possible recession in Europe, the false starts in the United States and geopolitical tensions in the Middle East,” central bank Governor Amando M. Tetangco, Jr. said in a speech at the Philippine Economic Briefing held at the Philippine International Convention Center in Pasay City.
Even as growth decelerated last year, the private sector understood that it was part of the Aquino administration’s strategy for development, he claimed. Tough governance reforms slowed the implementation of projects but have now created a stable and predictable business environment, Mr. Tetangco added.
Gross domestic product (GDP) growth was just 3.7% in 2011, well below the target 4.5-5.5% and the record 7.6% the year before.
For 2012, however, growth could be much better and even surpass the 5-6% goal, economic managers forecast during the panel discussion.
Trade Secretary Gregory L. Domingo was the “most bullish,” claiming GDP could expand by over 7%.
While exports dipped by as much as 6.9% last year, this was mainly due to a 32.7% plunge by the electronics sector, he explained. Other main export products such as apparel, furniture and coconut oil grew by double-digits.
“I expect a strong rebound this year,” Mr. Domingo said.
He also reckoned that the business process outsourcing (BPO) industry could grow by more than 20% this year. Investor confidence, moreover, is peaking, given the stable macroeconomic environment. “We are inundated with inbound investment missions from many big companies looking to set shop here. This is the most I have seen so far,” Mr. Domingo claimed.
Planning officials said an uptick in trade would fuel growth substantially. “The information from [Mr. Domingo] gives NEDA (National Economic and Development Authority) confidence that we will hit the higher end of the target or we might even exceed it,” Assistant Director-General Ruperto P. Majuca said.
Other growth drivers include private construction and substantial investments in energy, agribusiness, consumer goods, information technology, health, transport and tourism, Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr. added.
The last Philippine Economic Briefing in September was marked by sharp criticism of the sluggish economy. This year, investors were just as optimistic as the economic managers on prospects growth.
“With this excellent environment, we want to double down in the Philippines. We have set aside P89 billion for capital expenditures this year as we seek to invest in real estate, telecommunications and infrastructure,” Ayala Corp. Managing Director Eric T. Francia said during the private sector response.
The listed holding firm has earmarked up to P200 billion to participate in the PPP program in the next five years, particularly in airport, toll road, railways and power projects. Ayala Corp. bagged the contract for the Daang Hari-South Luzon Expressway Link road, the first PPP project to be auctioned off.
Mr. Francia admitted that there was a “sense of impatience” as the Aquino administration’s cornerstone PPP program suffered delay after delay last year. From the 10 priority projects promised to investors, only Daang Hari made it to the auction block.
“There is renewed optimism in PPP, though. There is a healthy investor appetite in the Philippines. We are very encouraged.”
Eduardo V. Francisco, president of BDO Capital & Investment Corp. and the Management Association of the Philippines, added that the private sector was ready to finance much-needed infrastructure projects.
“There are a lot of transactions and deals happening now in the private sector,” he remarked.
Cebu Air, Inc. President and Chief Executive Officer Lance Y. Gokongwei likewise said his firm’s massive investments in the country were due to the rosy economic outlook. “We have already ordered new aircraft, established a partnership for a pilot training center, and we plan to fly long-haul by 2013,” Mr. Gokongwei said. “The airline business requires very long-term planning. We would make these investments only if we believed the government is committed to growth and a level playing field.”
Finance Secretary Cesar V. Purisima proclaimed the investments were a sign the reforms of the Aquino administration were “bearing fruit.” “This is the heart of our initiative: to create a stable, transparent and accountable business environment to spur the economy,” he said in his speech.
With general objectives fulfilled, the private sector focused on specific industry concerns in the dialogue with the state economic team.
The BPO sector called for a focus on non-voice, high-value services, with China emerging as a stiff competitor. “China has more college graduates a year compared to the Philippines. These graduates also have more technical skills that are needed for non-voice services such as finance and banking,” Maulik Parekh, president and CEO of SPi Global Holdings, Inc., said.
The tourism industry, meanwhile, pushed for policy changes to encourage more visitors. “More visas must be offered and policies must be coordinated between the national and local governments,” urged Aileen C. Clemente, Philippine Tavel Agencies Association president.
The government must also address the 2.5% gross Philippine billings tax and the 3% common carriers tax imposed on international airlines, she said. “Airlines are conduits and not final services to be taxed. The Philippines is a group of islands. We need airlines if we want tourists to get here,” Ms. Clemente explained.
Air France-KLM is phasing out its direct flights between Manila and Europe this year, following a string of other international carriers that have complained about the heavy tax burden. — with a report from Kim Arveen A. Patria