Thursday, February 24, 2005
The philippines is Coming Back!
It cannot be because Valentine’s Day was the last holiday. Age took away that sort of exhilaration many seasons ago. Spring is in the air but that only means endless days of heat and that is nothing to get too excited about. Nonetheless, it is not even the end of the first quarter of 2005, and my feelings of good fortune for the nation in the last half of the year are beginning to bloom.
As expected and predicted, Moody’s report card of the Arroyo, administration showed less than a passing performance rating. Smokers and drinkers are paying more for their favorite “sin” and it did nothing to offset the dismally poor fiscal ‘accomplishments’ of the government. In fact, the ‘sin’ seems to be the way the administration handles the people’s money and the government’s finances. Oh well, like a lover subject to the flight of Cupid’s arrows, we must live with the results of the downgrade, for better or worse.
Apparently, international finance, like romance, is unfathomable to some of our political leadership as one senator told the president to ignore the reduced credit evaluation. Wrong audience I am afraid. The international lenders use the rating to judge risk, not for the ego of the international borrower i.e. the Philippines. That is like telling a woman that her using make-up does not matter; Daddy thinks you’re beautiful. Unfortunately, as potential suitors think a woman with lipstick looks prettier, so too foreign bankers think fiscally responsible governments are better to loan money to.
Expect another economic ‘bomb’ to fall around April to round out 2005’s First Quarter Storm of poor consequences for several years of bad policymaking from Malacañang. The First quarter GDP/GNP data does not show an accurate picture of the economy. The service sector grew well, but unfortunately, we are not a service-oriented economy. However, the last half of ’05 is going to be good and, could easily usher in a new period of increasing prosperity for the country. I haven’t felt this good since ’95. Here are some reasons for my good mood and my good expectations.
Despite opposition from the foreign funded anti-mining, anti-prosperity NGOs, the economically successful Supreme Court resolution of the Mining Act is already starting to take effect. Now with a firm legal basis and a President who understands the benefits to the nation, the multi-billion dollar minerals industry has the Philippines on their radar screen again. Of course, once they start putting their investments in place, the self-serving will attempt to derail the nation’s march to prosperity. However, some of these companies will persevere with jobs and wealth creation as an outcome
After preaching for years that agriculture, tourism, and mining were the industries that the Philippines should place the emphasis, finally, the long-term advantageous mining sector is coming into the economic game. Each year through the 2010 end of the Arroyo administration will see greater and greater economic gain thanks to her pushing for the legal validation of the Mining Act and her mobilizing various government agencies to help investors. For that, the nation can thank the lady. The picture is not entirely rosy and there will be difficulties. However, I believe that 2005 will mark the year that we finally got smart about mining and began to reap its rich rewards. One hundred thousand new jobs in the next 36 to 48 months will do much to vindicate the President’s mining policies.
The price multiplier affect of high world crude oil prices will lessen its grip on our wallets over the next nine months. It may seem hard to believe that, as of this writing, crude is above fifty dollars barrel again. Bear in mind that demand is very high right now with a colder than expected winter in both North America and Europe. Still holding price only at US$50 is a good sign.
By the time that the winter freeze is over, Iraq will firmly have a new government in place. It will take much more time for stability to fully overtake that nation, but before the end of the year, production will surpass pre-war levels and world prices will drop slightly. By that time also, the United States Congress will have passed legislation allowing for further oil exploration in Alaska that will have a negative influence on rising oil prices.
Another glimpse of a more prosperous future is in the announcement that the Philippines and Japan will sign a free trade agreement before year’s end. At last, we will have unfettered access to a major trading partner. The relationship is not as favorable for the Philippines as a free trade agreement with the United States would be. We buy much more from Japan than we do from the United States. However, it is a start. The key to this agreement is the emphasis on services, particularly contract workers that Japan needs so desperately from the Philippines. Want a tip on starting a new business? A Filipino friendly Japanese language school. Japan will make it easier for caregivers to enter Japan but will require additional language skills to keep the sex workers out.
Remember when the media used the phrases “Tiger Economy” and “Tiger Cub” to describe our neighbors in Asia? We have not heard those since 1997. Maybe soon we will call the Philippines a “Carabao Economy”: sometimes slow, sometimes not too smart, but once it gets going, it is hard to stop.
As expected and predicted, Moody’s report card of the Arroyo, administration showed less than a passing performance rating. Smokers and drinkers are paying more for their favorite “sin” and it did nothing to offset the dismally poor fiscal ‘accomplishments’ of the government. In fact, the ‘sin’ seems to be the way the administration handles the people’s money and the government’s finances. Oh well, like a lover subject to the flight of Cupid’s arrows, we must live with the results of the downgrade, for better or worse.
Apparently, international finance, like romance, is unfathomable to some of our political leadership as one senator told the president to ignore the reduced credit evaluation. Wrong audience I am afraid. The international lenders use the rating to judge risk, not for the ego of the international borrower i.e. the Philippines. That is like telling a woman that her using make-up does not matter; Daddy thinks you’re beautiful. Unfortunately, as potential suitors think a woman with lipstick looks prettier, so too foreign bankers think fiscally responsible governments are better to loan money to.
Expect another economic ‘bomb’ to fall around April to round out 2005’s First Quarter Storm of poor consequences for several years of bad policymaking from Malacañang. The First quarter GDP/GNP data does not show an accurate picture of the economy. The service sector grew well, but unfortunately, we are not a service-oriented economy. However, the last half of ’05 is going to be good and, could easily usher in a new period of increasing prosperity for the country. I haven’t felt this good since ’95. Here are some reasons for my good mood and my good expectations.
Despite opposition from the foreign funded anti-mining, anti-prosperity NGOs, the economically successful Supreme Court resolution of the Mining Act is already starting to take effect. Now with a firm legal basis and a President who understands the benefits to the nation, the multi-billion dollar minerals industry has the Philippines on their radar screen again. Of course, once they start putting their investments in place, the self-serving will attempt to derail the nation’s march to prosperity. However, some of these companies will persevere with jobs and wealth creation as an outcome
After preaching for years that agriculture, tourism, and mining were the industries that the Philippines should place the emphasis, finally, the long-term advantageous mining sector is coming into the economic game. Each year through the 2010 end of the Arroyo administration will see greater and greater economic gain thanks to her pushing for the legal validation of the Mining Act and her mobilizing various government agencies to help investors. For that, the nation can thank the lady. The picture is not entirely rosy and there will be difficulties. However, I believe that 2005 will mark the year that we finally got smart about mining and began to reap its rich rewards. One hundred thousand new jobs in the next 36 to 48 months will do much to vindicate the President’s mining policies.
The price multiplier affect of high world crude oil prices will lessen its grip on our wallets over the next nine months. It may seem hard to believe that, as of this writing, crude is above fifty dollars barrel again. Bear in mind that demand is very high right now with a colder than expected winter in both North America and Europe. Still holding price only at US$50 is a good sign.
By the time that the winter freeze is over, Iraq will firmly have a new government in place. It will take much more time for stability to fully overtake that nation, but before the end of the year, production will surpass pre-war levels and world prices will drop slightly. By that time also, the United States Congress will have passed legislation allowing for further oil exploration in Alaska that will have a negative influence on rising oil prices.
Another glimpse of a more prosperous future is in the announcement that the Philippines and Japan will sign a free trade agreement before year’s end. At last, we will have unfettered access to a major trading partner. The relationship is not as favorable for the Philippines as a free trade agreement with the United States would be. We buy much more from Japan than we do from the United States. However, it is a start. The key to this agreement is the emphasis on services, particularly contract workers that Japan needs so desperately from the Philippines. Want a tip on starting a new business? A Filipino friendly Japanese language school. Japan will make it easier for caregivers to enter Japan but will require additional language skills to keep the sex workers out.
Remember when the media used the phrases “Tiger Economy” and “Tiger Cub” to describe our neighbors in Asia? We have not heard those since 1997. Maybe soon we will call the Philippines a “Carabao Economy”: sometimes slow, sometimes not too smart, but once it gets going, it is hard to stop.
// posted by john mangun @ Thursday, February 24, 2005 
