The Philippines recorded a stunning 7.8% growth in the first three months of the year, making it the highest economic growth in Asia.
This economic growth, coupled with the investments grades, boosts the country’s efforts to lure investors to the country.
The World Bank even hailed the country’s economic performance, with country representative, Motoo Konishi, saying that the robust growth is “exciting” and indicated global confidence in what the Philippine government has been doing. He also said that the country is poised to become Asia’s newest economic tiger.
World-renowned economist, Nouriel Roubini, praised the Philippines for the “economic success” story when he visited Manila earlier this year. He said that because of the economic success, the Philippines is ready to be fully integrated into the regional economy under the planned ASEAN Economic Community.
“The economic fundamentals of the country have vastly improved. And you see the results in terms of overall growth, low inflation, low fiscal deficits, low stock of public debt, positive external balance, low external debt, the performance of equity markets and bond markets and of the currency. It’s already reflected markedly in the economic success of the country and therefore this country is competitive. It’s flexible, it has a diversified economy, can compete in a wide variety of sectors. Integration and opening, the furthering of it, can only be beneficial to the country over time.” he said.
The real estate sector, which played a vital role in the economic growth, will see the real estate boom going. With more investments in sight means more construction will be done. For BPO boom, it will continue the high demand for office spaces. For tourism, it means new hotels and resorts will flourish. With the OFWs continued remittances, it will play a vital role in house selling. Government spending will be accelerated to several billions more for the next three years so the sector expects more infrastructure, super highways, airports, seaports, and bridges to be built.
Indeed, the economic growth and the investment grade will make a big impact for the real estate sector.
“While we are basking in the economic growth and investment grades euphoria, we need to know that the next step is inclusive growth,” says Mr. Ramon Cuervo III, a real estate service professional.
“I think it goes well with the next step, which is much more aggressive reforms that can be undertaken so that this whole growth can be shared equitably,” Mr. Konishi said in a Philippine Star article.
Inclusive growth means all Filipinos should benefit from the economic boom of the Philippines, especially the poor. Some Filipinos are happy with the economic boom but some, particularly the poor, doesn’t feel it at all.
“As our economy is growing, business robust and wealth being generated by more, we also observe the fact that the gap between the rich and the poor is growing wider. Because of this, some people believes that the economic growth of 7.8% only benefits the rich, not the poor. There are still jobless people even though the economy has been steadily growing,” Mr. Cuervo said.
Yes, poverty still exists despite of the economic boom. Official statistics showed that that the poverty level has remained largely unchanged from 2006 up to early 2012. The country also has one of the highest income disparities in Asia.
Despite of the BPO boom, Filipinos continue to look for jobs abroad because they can’t find a decent job and that the unemployment rate in their own land is still a problem. The country’s GDP growth has been depending largely on their remittances.
The industry sector, including the construction sector, and the services sector contributed hugely to the growth while agriculture contributed only a mere 0.4%. So the workers in real estate, construction, hotel and tourism, manufacturing, etc. benefits most from the growth while those from agricultural sector are not. The country is well-known for agriculture but this sector is not benefiting, especially it is in this sector where most poor people originate.
Also, in our present economic and real estate boom, construction frenzy, urban growth and hyper business activity, another type of attitude has grown; that of being greedy, craving for more and the creation of unnecessary needs, sadly, at the expense of others.
“The private sector on the other hand is in a frenzy of building more, more, and more. But as I see it, these developments are targeted for the upper class, rich and foreign investors,” Mr. Cuervo said. “The motivation for more profit is not morally wrong in itself, but when one keeps profit, excess wealth and money for its own sake, blinded by greed, and then there is what we call Social disorder. They should also understand that the reason they are growing is because of their human resources. Employees are humans, not machines so they need to treat them properly.”
Mr. Cuervo also shared one example: “I see no reason why, or the need to be spending billions for example in the reclamation of Manila Bay, when there is a need to first address the need of Urban Renewal. The city of Manila is in an ugly stage. One can say that it has reached a level of urban decay. The slum and poor areas of Baseco has to be first addressed before we even start thinking of reclaiming more land just to satisfy the greedy.”
So, because all of these, it makes the growth non-inclusive.
In order for the country to have inclusive and sustainable growth, government’s consistency in stirring economic activities and in ensuring strong macroeconomic fundamentals has once again resulted to a strong GDP growth for the country, the Philippine Chamber of Commerce and Industry (PCCI) said in its statement.
PCCI urged the government to enhance the regulatory systems to support dynamic and proactive reforms to take advantage of the growth momentum. Among these are benchmarking of incentives especially in terms of supporting the entry and expansion of investments in very critical areas such as transportation and infrastructure that develop the value chains of agriculture and industries.
Noting that a regulatory system conducive to business and attractive to investments could take the country out of the so-called middle-income trap and make us at par with its more developed neighbors, PCCI is championing key legislations that will lock-in significant reforms that the country really needs to take off beyond its current growth track. These include the Anti-Trust/Competition Law, Rationalization of Fiscal Incentives, Customs Modernization and Tariffs Act, Land Use Code, Land Administration Reform Act and Mining Act Amendments.
The PCCI said the use of barriers that hinder investments in key sectors of the economy is a key issue as well. The organization opined that if the country is to benefit from its expanding integration with the rest of the world, government may need to relax some of the rules that restrict the entry of foreign capital in certain investments and in the practice of professions.
Noting that the two key engines of growth are government spending and consumption driven by remittances, Varela expressed PCCI’s optimism that the current momentum will be sustained if these two elements remain stable and consistent.
In the long term, PCCI said strong growth must be generated from agriculture and the manufacturing sectors. It is investments in these sector that can create quality jobs and decent incomes and that can help uplift poverty, PCCI stressed.
PCCI expressed optimism that with enough infrastructures spending underway, industrial output will improve in the coming quarters.
Mr. Cuervo shared that the Vatican Council taught us that “Every man has the right to possess a sufficient amount of earth’s goods for himself and his family. This has been the opinion of the Fathers and Doctors of the Church, who taught that men are bound to come to the aid of the poor and to do so not merely out of their superfluous goods. When a person is in extreme necessity he has the right to supply himself with what he needs out of the riches of others.”
So now, the next challenge for the government is the inclusive growth- to make sure that all Filipinos will benefit and enjoy from the economic boom.
***With sources from Philippine Star and PCCI