Philippine Economic State

The first quarter economic figures is not entirely optimistic. Export earnings in February 2009 dropped by 39.1 percent to $2.504 billion from $4.112 billion in February 2008 (go to census website at http://www.census.gov.ph for additional info). Total quantity of domestic trade transactions in the 4th quarter of 2008 went down by 29.6 percent, resulting to 3.73 million tons from 5.3 million tons reported during the same period of 2007.

The Producer Price Index (PPI, 2000=100) for the manufacturing industry recorded a slower growth of 2.7 percent in February 2009, still modest, yet compared with other Asian countries which registered negative figures, practically in still good standing. Yet, owners and manufacturers whom I met at Sherwood Hills Golf Club last Friday said they're not quite optimistic that they'll be able to recover very soon and replicate the phenomenal manufacturing growth they had in 2006 and 2007.

This explains why factories are shutting down, export industries are trimming their labor force and a lesser than expected number of new businesses are cropping up. Simply put, orders from abroad are lessening if not entirely nil. The need for Philippine-made products are slowing down. Even the local economies are also slowing down or very near crash levels.

Our local economy cannot generate enough funds and revenues. That's why the Bureau of Internal Revenue (BIR) announced that it is lowering its revenue targets simply because of the state of our economy. The 800 billion peso revenue target is so high, says one BIR friend, that it would take a whole new set of tax laws or even an increase in existing tax laws to be able to generate such a figure, when, one or two years ago, this figure would have been easy cake.

Now, the so-called economic reforms being implemented by the Obama administration is still not working. As described by a Boston-based balikbayan whom I chatted during a golf game last Friday, the US economy is still very weak. Obama's "magic" is still not being felt by many despite the passage of the economic stimulus package. One reason: the crisis has reached critical levels and still remains impossible to solve. Analysts say this crisis is expected to last more than the predicted 18 months period. If the US economy continues to falter, then, it would be very hard for the US government to even extend a hand to other economies such as the Philippines.

The logical direction is therefore other "more robust" economies, such as China and Japan. Yet, these economies are taking a battering worse than the US. Singapore is not faring any better. Nor does European economies. So, what would save us from an impending economic meltdown?

We must turn this negative thing into a positive one. How do we do that? By fortifying or enhancing our competitive strengths and lessening our weaknesses. How do we possibly achieve that?

1. Break down monopolies and allow new money to compete.
2. Generate more revenues by passing the sin tax laws.
3. Spur growth by attracting foreign investors and undertake infrastructure projects under the Build-Operate-Transfer (BOT) law.
4. Generate growth in the tourism sector by emphasizing on local tourism instead of relying much on foreign tourism.
5. Encourage more Filipinos to undertake entrepreneurial pursuits to grow the economic base horizontally while managing vertical growth.
6. Build more second home communities for foreign retirees, targetting the US, European, Chinese, Korean and Japanese markets.
7. Implement the agrarian reform program in an honest fashion.
8. Lessen graft and corruptive practices in the bureaucracy by trimming it down to manageable levels. A humongous bureaucracy is proving to be a burden rather than a boon during these hard times.
9. Create newer zones of peace in violence-prone yet prime tourist locations.
10. Encourage banks to further improve their marketing efforts, therefore encouraging more deposits and widen their loan portfolios to be able to extend fund assistance to new entrepreneurs.