Philippines could be 'next rising star'

Businessworld - THE PHILIPPINES could be the “world’s next rising star” because it is relatively insulated from the turbulent global environment, economists said on Friday, but the country’s ascent will depend on finding solutions to key constraints.


“When you look for countries that could be the world’s next rising star, you look for increasing growth, a stable fiscal deficit, strong English skills and a belief in education,” said Tyler Cowen, an economist at George Mason University, at the inaugural conference of the Angara Centre for Law and Economics.


“The Philippines has all of those things. It has the best chance,” he added.


Exposure to Europe’s ongoing debt woes and the slowdown in China is limited, Mr. Cowen explained as he lumped the Philippines along with Indonesia, Ghana and Nigeria as among the countries expected to be resilient amid the global downturn.


Mr. Cowen stressed, though, that this was not an “absolute prediction,” with much depending on how the government makes the most its opportunities.


“The discussions must begin with structural transformation,” added John Nye, a fellow economist at George Mason University.


One of the main issues that needs to be resolved is how to move people from poor agriculture jobs to better-paying ones in industry, Mr. Nye said, adding that more often than not, this also involves physically moving people to the urban centers.


“However, there are so many laws that make this difficult -- laws on zoning, taxation, competition, labor, trade. This network of policies adds up,” Mr. he said. No single law -- not even the often-blamed foreign ownership limits in the 1987 Philippine Constitution -- is to blame, he added.


Changes must be made to these “redundant,” “misguided” and “contradictory” laws so that more businesses and investments can come into the Philippines and generate much-needed employment.


“The fact that we have so many overseas Filipino workers only means that we have a lot of highly-skilled people willing to work. Why are they so employable abroad but not here? Clearly, there are obstacles to creating employment,” Mr. Nye said.


University of the Philippines economist and Monetary Board member Felipe M. Medalla, meanwhile, tagged infrastructure as another constraint to the Philippine economy.


He lamented the sluggish pace of domestic infrastructure development, pointing to the Ninoy Aquino International Airport Terminal 3 (NAIA 3), which “can’t even be fully operational after three presidents”.


“The connector road between the North Luzon Expressway and the South Luzon Expressway can increase development and bring it to the provinces without congesting Manila,” Mr. Medalla noted.


For his part, Socioeconomic Planning Secretary Arsenio M. Balisacan claimed the government was already eyeing several “low-hanging fruits,” among them the computerization of government processes.


“I find it surprising that any entrepreneur who wants to set up a business has to show up at the Department of Trade and Industry and apply for his permits there,” Mr. Balisacan said.


“This exposes entrepreneurs to direct contact with the bureaucracy and encourages patronage and corruption. If the procedures were online, it would be much more simple, quick and transparent for everyone.”


Another is the integration of terminal fees to the price of airplane tickets, a policy move due to take effect this month.


“We are the only country in Asia or even the world that collects a separate fee when it can just be billed directly. These small inconveniences increase the cost of doing business,” he noted.


Mr. Balisacan recognized that the government’s infrastructure program had taken some time to get off the ground, but he explained that this was due to the “utmost care” that goes into reviewing contracts.


“There is a trade-off: the projects could be fast now but they could get bogged down in the future. We don’t want another Northrail mess or another Piatco (Philippine International Air Terminals Co., Inc.) mess,” he said.


The 80-kilometer Northrail project that will link the northern part of Metro Manila with the Diosdado Macapagal International Airport in Clark, Pampanga, was suspended in March 2010 pending the review of the contract with China National Machinery Industry Corp.


The Commission on Audit has estimated that delays in the project works cost the government P2.21 billion last year from penalties and interest charges.


The Piatco controversy, meanwhile, stems from the government’s decision to scrap the firm’s contract to build NAIA-3 due to alleged irregularities. Lawsuits filed over the government’s seizure of the facility and the compensation that needs to be paid to Piatco remain unresolved.

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