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Storm won't deter Philippines, by Assif Shameen

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Here are some excerpts from an article in this weeks Barrons business journal.


Pushed by a surge in consumption, the Philippine economy expanded at a 7.1% year-over-year pace in the third quarter, second only to the 7.4% growth of China. The county's central bank has been able to cut its benchmark interest rate four times in the past 12 months to a record-low 3.5% since inflation is running below 3%. Budget deficits have been reined in. The government already has ambitious plans to improve air, rail, and road "connectivity" says Hak-Bin Chua, an economist for Bank of America Merrill Lynch in Singapore. "The Philippines is the turnaround story in Asia," he says.


Investors have taken note. The Philippines main sock-market index is up 32% this year. Mostly off the radar of foreign investors, the volatile index is up nearly sixfold over the past decade. With its young, growing population, the Philippines should enjoy a demographic dividend that aging Asian societies like Japan, Korea, and Taiwan won't. The nation will have the region's fastest-growing labor force over the next decade, with more than a 30% rise in its work force. Estimates on remittances back home from Filipinos working abroad will rise about 5% next year.


Corporate debt-to-equity ratios have dropped from 1.5 times 12 years ago to 0.6 times, giving the private sector more flexibility and resilience. Projected loan growth of 15% next year and further monetary easing will push growth. The country's booming business process out-sourcing is expected to generate $17.5 billion next year, a rise of 25%.


The rest of the article is about stock predictions which I did not include here.

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I read a similar article a week ago. I think Indonesia was third with about 6.5% growth.


If the Philippine economy gets stronger, so does the piso against the dollar.

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yup agreed.


the phils is doing great! if u u went up the the tao temple temple 5 years ago and took a photo take it out and compare to today. the difference is staggering.

and that was in the gfc.


said it once i will say it agin.


dont come here if you are on the limits of what you think will give u an ok life. in 10 years max you will be washed away.

come here fast if u want a filipina bride 40 years younger. in 10 years time they wont even spit on you. if u dont believe me check out dia. the thaiss, indonesian and chinese girls just dont wanna know the fat old western slobs anymore.

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Topic should have been, Storm won't deter Philippine economy.


I didn't write it. I only reported it.

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Just a pity the locals wages are not keeping up !

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Ok time to put the fly back in the ointment.


The much vaunted growth figures, if they exist are well below that needed for the runaway out of control population growth here.


The majority of the so called growth figures are in OFWs remittances, a testimony to human trafficking on the grandest of scales. Plus 'Hot Money' chasing stock values, no investment just pure speculation easy come, even easier to go.


There are always 'hot spots' and I am sure that these will continue, they did when growth was consistently higher under Arroyo. I see less money being spent in most areas I haunt and a lot more in highly select areas, where i cannot afford to consider forcing my wallet open.


So what will convince me that the growth here is real and not consumer led purchasing of select imports at the high end or relying on PEZA exports


Ok the start or even the contracted agreements on any of the many PPP that have been talked about.


The widening of the tax base so that the present tax payers stopped getting financially raped.


Many jobs lost so far and not replaced at the lower end of the employment market, under employment far too high.


A significant increase in number of class rooms needed to be built and teachers to staff them.


Am I being contrary for the hell of it or just in agreement with the views already expressed by former Cabinet Economists etc.


Having been in business here and paying associated costs correctly. I can see first hand why it is that many of the small to medium operations cheat on their taxes. Should they pay them correctly, plus other associated labour costs then they would not have a business, why? because they are taxed the same as large corporates and have few if any allowances or thresholds.


One of the key factors that keeps cropping up in survey after survey by overseas bodies is that Tax issues remain at crisis levels with the highest marginal rates of tax being paid by the lower income families and businesses. The key to the success of most 'mixed' economies is to have a strong small to medium sized business market correctly paying taxes at the correct level.

Progressive taxation as opposed to regressive which identifies the current system as predatory and confiscatory. When something as basic as due diligence and due process to establish the feasability of tax changes is waived as is a simple form of fiscal forensic analysis is waived in favour of 'moments of deeming', which are whimsical at best, small and medium sized business go bust and employment opportunities are lost.

There is a correlation with the Philippine s having the longest running insurgency of almost anywhere with various groups at it and the levels of confiscatory measures taken by central government. Example how can those who the wages boards set as a minimum wage figure of barely 200 a day be taxed the same as metro manila wage boards of near 450 a day. Not on income tax but on purchase taxes such as 18% amusement tax, passed on to consumers etc by businesses that then do not get the profitable sales as they are now priced out of their market.


For me any talk of growth rates is measured with a deep scepticsm based upon direct knowledge of seeing how things in some very small parts of the county do well without any form of trickle down effect to the bigger picture.


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