Philippines is no basket case
Perhaps most important for the average citizen, inflation is only 3.2 per cent and holding steady – in marked contrast to the relentlessly soaring prices in Vietnam which have impoverished many people
It is always difficult to change entrenched perceptions, and that is never more true than those regarding the Philippines and Vietnam. Most people think the Philippines is an endemic basket case, while they view Vietnam as a rising economic powerhouse.
In reality, as the Financial Times, the Economist and the New York Times have belatedly reported, the Filipinos now have the region’s best performing economy and the Vietnamese the worst.
Since we’ve long revealed Vietnam’s ongoing debacle, let us focus on the still under-reported fact that the Philippines, with its wild and wacky democracy, is really taking off – and how!
Earlier this month, the Asian Development Bank and the World Bank both projected that economic growth in the Philippines will surge ahead of that in most other East Asian nations.
Already, despite the global economic downturn, its GDP growth in the first half of this year hit 6.1 per cent.
Still not satisfied, Secretary of Finance Cesar Purisima wants the Philippine economy, having now grown for 54 straight quarters, to kick up higher to sustainable 7 or 8 per cent growth rates.
Meanwhile, the international ratings agency Standard & Poor’s, has raised Manila’s sovereign debt to one point below investment level emulating the move by fellow agency Fitch last year.
Given that another hike to investment grade is likely soon, the stock market and the peso have both risen in tandem with swelling levels of foreign investment.
Perhaps most important for the average citizen, inflation is only 3.2 per cent and holding steady – in marked contrast to the relentlessly soaring prices in Vietnam which have impoverished many people.
Other factors also contribute to this rosy picture. To begin with, remittances from foreign Filipino workers have tripled in recent years to $20 billion, rebuffing the financial malaise in the West and elsewhere.
As well, after replacing India as host of the world’s biggest call centre industry, Manila now projects its English-speaking service sites will double their total workforce to 1.2 million.
They already contribute almost $11 billion to the economy, and are likely to continue doing so, since the nation’s median age of 22 is the lowest in Asia – again superior to that in Vietnam.
And finally, after souring on the crassness of places like Bali and Phuket, more tourists are flocking to Baguio and Dumaguete and other gems in the Philippines – in part also due to a recent open-skies agreement.
Exceeding any other positive factor, however, is the peace deal that Manila struck last week with the Moro Islamic Liberation Front to end a long-festering insurgency on the southern island of Mindanao.
That conflict, which caused more than 120,000 deaths, had its genesis in the predominantly Catholic central government’s alienation of its Muslim, or Moro, compatriots on Mindanao.
Under the peace accord, a new Muslim-majority, self-governing region of Bangsamoro will be created in 2016 and will have the right to conduct its own local affairs and enforce Sharia law among the Moros.
In return, the MILF has vowed to disarm its 12,000 fighters, drop its demand for full independence and allow Manila to retain control over fiscal policy, citizenship, defence and foreign affairs.
All areas of Mindanao will be able to hold a referendum to decide whether to join Bangsamoro or not, so the deal ensures that non-Muslim communities can opt out if they wish.
It is a heck of a breakthrough and could well presage even juicier boom times, since Mindanao is rich in resources and investors are already salivating at the prospect of exploiting them.
If that happens, it would spur further investment and may make Purisima’s ambitious growth goals seem conservative – and would certainly bury that daft basket case misperception about the Philippines for good.
Roger Mitton is a former senior correspondent for Asiaweek and former Bureau chief in Washington and Hanoi for The Straits Times.