Philippine business: Fat and lazy

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The past 10 years have been economically good to the Philippines. Of course, according to the Philippine bashers, that is not true. But we can forgive them for their views because it is all political spin.

Income, wealth equality, jobs and poverty are problems. However, the reality is that the systemic issues that need to be changed to address these conditions require political balls—not will—and making unpopular choices. The last political leader that was able to change things was President Gloria Macapagal-Arroyo, when she pushed the value-added tax that helped balance the government’s books. Don’t bother e-mailing me with your rebuttal. It will just be embarrassing for you. Numbers do not lie, unlike
political viewpoints.

Actually, during the Aquino administration, the idea of moving unused/unspent money around between departments during the fiscal year was a good idea also, even if unlawful and subject to great corruption. Private companies do that all the time.

Say, a bank wants to build a new additional branch down the road from an existing overcrowded location. But for whatever reason, the new branch is delayed. Money allocated for the new branch is put on hold and diverted to remodeling and expanding the existing branch.

But back to the Philippine economy. Part of the problem is that people cannot seem to think back beyond the last few months. Everything must be put in historical perspective. But looking at the long picture tends to erase all the political noise that we are so used to and fond of. If you take a long enough view, you might realize that your favorite political messiah or devil is only one piece of a jigsaw puzzle that might take 10 years to finish.

The Philippine GDP measured in nominal terms is 100 percent larger and on a per-capita basis has increased by 40 percent over 10 years. That is a big deal. The United States GDP is 4.4 percent larger, and for Thailand the GDP on a per-capita basis is 24
percent bigger.

Philippine government external debt is now equivalent to 42.1 percent of the country’s GDP from 51.4 percent in 2006. The Philippine stock market has doubled in price. At the end of 2006, the Philippine peso/US dollar exchange rate was 52 and is now 50.30. Even with all the wailing and gnashing of teeth, the peso has depreciated 1.3 percent in 2017. No big deal.

However—and there always is a “however”—I believe that Philippine business has become fat and lazy from the good times. And that can be found in our telecommunications sector as the best example.

We went from virtually no telephone communications to the texting capital of the world in large part, thanks to the telecoms companies. They made a huge bunch of money. But they have failed miserably on data services and providing fast Internet connection. At this point, I am willing to have Xi Jinping knowing whether my wife and I are watching The Punisher or The Originals on Netflix.

The Philippine government running businesses has failed, too. If the way to get a viable and safe light rail in Metro Manila means changing the name to “Mao Rail Transit 3,” that is certainly a possibility. How about “Manila Emperor Hirohito International Airport”?

Ok, maybe having to go to my third-floor bedroom to get a strong cell signal and waiting in traffic and for airplanes has clouded my judgment a little. But the gains of the past decade are going to be mitigated if not lost unless the economic battles won before are fought again.

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E-mail me at [email protected] Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

 



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