Lucio Tan wants faster growth
On a recent trip to Shanghai, Lucio C. Tan climbed the 367 steps of Lupo Bridge without much difficulty. He recently had to be operated on in one leg to fix a torn ligament after he slipped while getting off his helicopter.
At 75, the Kapitan doesn’t show the wear and tear of a man his age. He plays six holes of golf daily, swims and exercises regularly, and keeps a daily grueling schedule. He is a voracious reader. His mind is like a sponge for information. He dutifully writes down important names, dates, and data. He keeps a small tape measure, a magnifying glass, and even a flashlight in his pocket. He attends to the macro and the minutiae of doing business.
A rags-to-richest legend, Tan has to keep himself in top shape and on top of the situation to oversee a huge and diversified conglomerate–airline, tobacco, brewery, distillery, chemicals, food, hotels, steel fabrication, education, even travel.
The group is one the Philippines’ biggest employers and biggest taxpayers. Despite the recent global financial crisis and the downturn in the local economy. “we have not closed any of our factories nor have we significantly reduced manpower,” he points out.
Being involved in different businesses is a unique challenge, he says, “we have to know everything about each of the industries we are in. The constant need to study, learn, innovate and make ourselves globally competitive is, to me, our greatest challenge.”
Tan owns the fourth largest banking group in the Philippines, the merger of PNB (P16.6 billion revenues and P744 million in profits in 2008); and Allied Bank (P9.38 billion in revenues and P345.3 million in profits). Together, PNB and Allied have combined assets of P460.84 billion (No.4), deposits of P350.37 billion (No.4), loans of P174.62 billion (No. 4), and equity of P47.97 billion (No. 3).
Tan owns the largest airline, Philippine Airlines (P62.9 billion revenues and P1.28 billion profits in 2008 fiscal year; for the 2009 fiscal year, PAL Holdings, which owns PAL, generated a record P75.3 billion revenues, up 13.56 percent but lost a colossal P12.95 billion); the largest tobacco company, Fortune Tobacco, (P33.2 billion in revenues in 2008 and P457 million in profits); the largest piggery, Foremost Farms (P1.28 billion in revenues and P38 million in losses); the biggest rhum company, Tanduay Distillers (P9 billion in revenues and P299 million in profits); as well as the 510-room Century Park Hotel in Manila, a full bank in Xiamen, Allied Bank; a 460-room five star hotel in Shanghai, The Eton (one should try the hotel to know what five-star means); a 500-room hotel under construction in Xiamen, the 36-story International Bank Center again in Xiamen, a 2.3-hectare planned commercial-residential and shopping mall planned also in Xiamen, a residential complex in Beijing, the Charter House in Makati and Hong Kong, and various other properties in the region. He is developing a city out 1,100 hectares south of Manila and overlooking Laguna Bay, The Eton.
One enterprise that has yet to deliver plenty of profits is the University of the East. Among major educational institutions in 2008, according to SEC data, UE was only No. 5 in revenues (P959 million) with profits of P77 million. FEU had P1.74 billion revenues and P593 million profits; University of Perpetual Help Rizal P1.32 billion revenues and P193 million net; CEU P1.2 billion revenues and P269 million net; and Malayan Colleges P1.14 billion revenues and P209 million net.
Despite his riches, Tan remains a plain-spoken man. He dresses simply, preferring the neat and practical over the elegant and fashionable. He believes in “ren” – the Chinese word for perserverance, and in the virtues of humility, frugality, and benevolence. They are, he stresses, important ingredients for success. “As one earns more, one must also practice humility and frugality by leading a simple lifestyle. Otherwise, everything that one has worked for could easily be lost.” Also, he adds, “one who shares is likely to get more in return.”
Tan is disappointed with the pace of development in the Philippines. He notes that in China, the landscape changes every year, for the better. To catch up with China’s phenomenal growth (9 percent to 10 percent a year in GDP rate), he winces, it will take 100 years; 200 years with the corruption; and probably 300 years with a militant union. He says we need a long-lasting industrial peace if we want to make Philippine brands globally competitive.
In China, Tan notes, labor strikes are banned. In such competitive countries, ne says, “you would see a level of worker productivity that is four or five times that our ours> Some countries have even scrapped minimum wage laws to boost employment generation and enhance productivity.”
He asserts, without hyperbole, that if a road were to cost P1 billion in China, the same road would cost P10 billion to P12 billion in the Philippines, with the scale of local corruption.
biznewsasia@gmail.com
Wednesday, December 23, 2009
Debacle in Copenhagen
Climate change debacle
On Dec. 7 to 12, leaders of 193 nations gathered in Copenhagen to produce a treaty that would replace the Kyoto Protocol which expires in 2012. The rare summit, attended by no less than 120 heads of state and of government, was neither a great success nor a complete failure.
It was not a great success because the summit failed to produce a replacement to the Kyoto Treaty, failed to endorse a legally binding plan for reducing greenhouse gas emissions, and will certainly fail to curb global warming, that is prevent the earth’s temperature from rising 2 degrees Celsius to avoid disasters of many kinds.
But it was not a complete failure because the Conference of Parties or COP 15 as the summit came to be known, produced an interim accord that at first glance would curb greenhouse gases, provide mechanisms for verifying countries’ emissions, stop the destruction of rain forests, and raise money to help vulnerable nations adapt to climate change thru burden sharing by the world’s rich countries.
Some $100 billion a year has been pledged for the Copenhagen Green Climate Fund beginning in 2020 with startup of $10 billion a year for three years from 2010 to 2012, or $30 billion in three years. United Nations Secretary General Ban Ki Moon said “$100 billion a year is significant big money.” The Europen Union pledged $3.6 billion annually to the start-up fund. Japan and the US made unspecified amounts.
Some people credit United States President Barack Obama for preventing the summit’s total collapse which was certain in late afternoon of the last day, Friday, Dec. 18. He endured at least two instances of snub by Chinese Premier Wen, negotiated with India, Brazil and South Africa by inviting himself into closed-door meeting of the four countries and forged an agreement.
But China should also be given credit for success. It softened on its stand no to subject itself to international verification because it would hurt its sovereignty.
China’s willingness to submit to a verification system under which all countries would agree to report on their actions and open their books to inspection. Transparency is a huge issue in the US Congress. Obama stressed in his opening remarks on Friday that he would not agree to a deal unless China gave ground.
China, the world's largest emitter of greenhouse gases, lauded the outcome of the COP15 that ended with a nonbinding agreement that urges major polluters to make deeper emissions cuts — but does not require it. “It brought significant and positive results,” said China Foreign Minister Yang Jiechi.
Among the positive results, Yang said, were that it upheld the principle of "common but differentiated responsibilities" recognized by the Kyoto Protocol, and made a step forward in promoting binding emissions cuts for developed countries and voluntary mitigating actions by developing countries.
"Developing and developed countries are very different in their historical emissions responsibilities and current emissions levels, and in their basic national characteristics and development stages," Yang said in a statement. "Therefore, they should shoulder different responsibilities and obligations in fighting climate change."
Yang added the conference also created a consensus on key issues such as long-term global emissions reduction targets, funding and technology support to developing countries, and transparency.
"The Copenhagen conference is not a destination but a new beginning," Yang said
“We've made meaningful and unprecedented breakthrough here in Copenhagen,” said Obama following 13 hours of non-stop negotiations. “For the first time in history all major economies have come together to accept their responsibility to take action to confront the threat of climate change.”
“We agreed to join an international effort to provide financing to help developing countries, particularly the poorest and most vulnerable, adapt to climate change. And we reaffirmed the necessity of listing our national actions and commitments in a transparent way,” the US President said.
“These three components -- transparency, mitigation and finance -- form the basis of the common approach that the US and our partners embraced here in Copenhagen,” he explained. He hopes countries will reach consensus “around these three points, a consensus that will serve as a foundation for global action to confront the threat of climate change for years to come.”
Throughout the last day of COP15, Obama worked with Prime Minister Meles of Ethiopia, who was representing Africa, Premier Wen of China, Prime Minister Singh of India, President Lula of Brazil, and President Zuma of South Africa, to achieve what I believe will be an important milestone.
Earlier Friday evening, Obama had a meeting with the last four leaders -- from China, India, Brazil, and South Africa. In that meeting, he said, “we agreed to list our national actions and commitments, to provide information on the implementation of these actions through national communications, with international consultations and analysis under clearly defined guidelines. We agreed to set a mitigation target to limit warming to no more than 2 degrees Celsius, and importantly, to take action to meet this objective consistent with science.”
“We've come a long way,” Obama gushed, “but we have much further to go.”
The Copenhagen Accord underlines “that climate change is one of the greatest challenges of our time” and emphasizes the countries’ “strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities."
The text acknowledges to keep average global temperatures from rising more than 2 degrees Celsius above pre-industrial times, "consistent with science and on the basis of equity."
all references to the lower number of 1.5 degrees — called for by island nations whose very survival is at risk — were removed from the final version.
Emissions reduction targets
The text acknowledges that deep cuts in global warming emissions are necessary, but it provides no targets.
All references to a 2050 goal were eliminated from the final version.
Initial drafts had called for cutting emissions to 50% of 1990 levels by then.
Initial versions also suggested that a 2020 goal would be added, but it did not appear. In the proposed text, the Annex I parties would commit to implement their individual emissions reduction goals for 2020 (see chartsthis page). The text, if approved, would require them to file those plans by February 2010, but it doesn't recommend an overall target or minimum reduction level.
There are no emissions reduction targets for developing nations. The closest the text comes to suggesting a target is this:
“We should cooperate in achieving the peaking of global and national emissions as soon as possible, recognizing that the timeframe for peaking will be longer in developing countries and bearing in mind that social and economic development and poverty eradication are the first and overriding priorities of developing countries and that a low-emission development strategy is indispensable to sustainable development.”
Financing
The text includes a combined $30 billion in fast-start money from developed nations across the 2010-2012 period.
That funding — meant to support adaptation, technology transfer and development, and mitigation efforts — would be prioritized for the most vulnerable developing countries, such as the least-developed countries, small island states and African countries.
Beyond 2012, the draft states that developed countries would “set a goal” of mobilizing $100 billion a year by 2020, with the money coming from a variety of public and private sources.
A Copenhagen Climate Fund would be established as the financial mechanism for funding projects, including forestry, adaptation, and capacity building. And a Technology Transfer Mechanism would be established “to accelerate technology development and transfer.”
Measure, report, verify
For oversight, a “High Level Panel” would be established under the Conference of Parties’ guidance, according to the proposal.
Developed nations would fall under a strict monitoring regime: “Delivery of reductions and financing by developed countries will be measured, reported and verified in accordance with existing and any further guidelines adopted by the Conference of Parties, and will ensure that accounting of such targets and finance is rigorous, robust and transparent.”
Among non-Annex I countries, only those seeking international support “will be subject to international measurement, reporting and verification in accordance with guidelines adopted by the Conference of Parties.” Other actions would fall under domestic measurement reporting and verification instead.
Completion date
The proposed text, still legally non-binding, offered no timetable for writing a legally binding accord. Initial drafts had set a goal of no later than the next Conference of Parties meeting in Mexico in 2010.
biznewsasia@gmail.com
On Dec. 7 to 12, leaders of 193 nations gathered in Copenhagen to produce a treaty that would replace the Kyoto Protocol which expires in 2012. The rare summit, attended by no less than 120 heads of state and of government, was neither a great success nor a complete failure.
It was not a great success because the summit failed to produce a replacement to the Kyoto Treaty, failed to endorse a legally binding plan for reducing greenhouse gas emissions, and will certainly fail to curb global warming, that is prevent the earth’s temperature from rising 2 degrees Celsius to avoid disasters of many kinds.
But it was not a complete failure because the Conference of Parties or COP 15 as the summit came to be known, produced an interim accord that at first glance would curb greenhouse gases, provide mechanisms for verifying countries’ emissions, stop the destruction of rain forests, and raise money to help vulnerable nations adapt to climate change thru burden sharing by the world’s rich countries.
Some $100 billion a year has been pledged for the Copenhagen Green Climate Fund beginning in 2020 with startup of $10 billion a year for three years from 2010 to 2012, or $30 billion in three years. United Nations Secretary General Ban Ki Moon said “$100 billion a year is significant big money.” The Europen Union pledged $3.6 billion annually to the start-up fund. Japan and the US made unspecified amounts.
Some people credit United States President Barack Obama for preventing the summit’s total collapse which was certain in late afternoon of the last day, Friday, Dec. 18. He endured at least two instances of snub by Chinese Premier Wen, negotiated with India, Brazil and South Africa by inviting himself into closed-door meeting of the four countries and forged an agreement.
But China should also be given credit for success. It softened on its stand no to subject itself to international verification because it would hurt its sovereignty.
China’s willingness to submit to a verification system under which all countries would agree to report on their actions and open their books to inspection. Transparency is a huge issue in the US Congress. Obama stressed in his opening remarks on Friday that he would not agree to a deal unless China gave ground.
China, the world's largest emitter of greenhouse gases, lauded the outcome of the COP15 that ended with a nonbinding agreement that urges major polluters to make deeper emissions cuts — but does not require it. “It brought significant and positive results,” said China Foreign Minister Yang Jiechi.
Among the positive results, Yang said, were that it upheld the principle of "common but differentiated responsibilities" recognized by the Kyoto Protocol, and made a step forward in promoting binding emissions cuts for developed countries and voluntary mitigating actions by developing countries.
"Developing and developed countries are very different in their historical emissions responsibilities and current emissions levels, and in their basic national characteristics and development stages," Yang said in a statement. "Therefore, they should shoulder different responsibilities and obligations in fighting climate change."
Yang added the conference also created a consensus on key issues such as long-term global emissions reduction targets, funding and technology support to developing countries, and transparency.
"The Copenhagen conference is not a destination but a new beginning," Yang said
“We've made meaningful and unprecedented breakthrough here in Copenhagen,” said Obama following 13 hours of non-stop negotiations. “For the first time in history all major economies have come together to accept their responsibility to take action to confront the threat of climate change.”
“We agreed to join an international effort to provide financing to help developing countries, particularly the poorest and most vulnerable, adapt to climate change. And we reaffirmed the necessity of listing our national actions and commitments in a transparent way,” the US President said.
“These three components -- transparency, mitigation and finance -- form the basis of the common approach that the US and our partners embraced here in Copenhagen,” he explained. He hopes countries will reach consensus “around these three points, a consensus that will serve as a foundation for global action to confront the threat of climate change for years to come.”
Throughout the last day of COP15, Obama worked with Prime Minister Meles of Ethiopia, who was representing Africa, Premier Wen of China, Prime Minister Singh of India, President Lula of Brazil, and President Zuma of South Africa, to achieve what I believe will be an important milestone.
Earlier Friday evening, Obama had a meeting with the last four leaders -- from China, India, Brazil, and South Africa. In that meeting, he said, “we agreed to list our national actions and commitments, to provide information on the implementation of these actions through national communications, with international consultations and analysis under clearly defined guidelines. We agreed to set a mitigation target to limit warming to no more than 2 degrees Celsius, and importantly, to take action to meet this objective consistent with science.”
“We've come a long way,” Obama gushed, “but we have much further to go.”
The Copenhagen Accord underlines “that climate change is one of the greatest challenges of our time” and emphasizes the countries’ “strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities."
The text acknowledges to keep average global temperatures from rising more than 2 degrees Celsius above pre-industrial times, "consistent with science and on the basis of equity."
all references to the lower number of 1.5 degrees — called for by island nations whose very survival is at risk — were removed from the final version.
Emissions reduction targets
The text acknowledges that deep cuts in global warming emissions are necessary, but it provides no targets.
All references to a 2050 goal were eliminated from the final version.
Initial drafts had called for cutting emissions to 50% of 1990 levels by then.
Initial versions also suggested that a 2020 goal would be added, but it did not appear. In the proposed text, the Annex I parties would commit to implement their individual emissions reduction goals for 2020 (see chartsthis page). The text, if approved, would require them to file those plans by February 2010, but it doesn't recommend an overall target or minimum reduction level.
There are no emissions reduction targets for developing nations. The closest the text comes to suggesting a target is this:
“We should cooperate in achieving the peaking of global and national emissions as soon as possible, recognizing that the timeframe for peaking will be longer in developing countries and bearing in mind that social and economic development and poverty eradication are the first and overriding priorities of developing countries and that a low-emission development strategy is indispensable to sustainable development.”
Financing
The text includes a combined $30 billion in fast-start money from developed nations across the 2010-2012 period.
That funding — meant to support adaptation, technology transfer and development, and mitigation efforts — would be prioritized for the most vulnerable developing countries, such as the least-developed countries, small island states and African countries.
Beyond 2012, the draft states that developed countries would “set a goal” of mobilizing $100 billion a year by 2020, with the money coming from a variety of public and private sources.
A Copenhagen Climate Fund would be established as the financial mechanism for funding projects, including forestry, adaptation, and capacity building. And a Technology Transfer Mechanism would be established “to accelerate technology development and transfer.”
Measure, report, verify
For oversight, a “High Level Panel” would be established under the Conference of Parties’ guidance, according to the proposal.
Developed nations would fall under a strict monitoring regime: “Delivery of reductions and financing by developed countries will be measured, reported and verified in accordance with existing and any further guidelines adopted by the Conference of Parties, and will ensure that accounting of such targets and finance is rigorous, robust and transparent.”
Among non-Annex I countries, only those seeking international support “will be subject to international measurement, reporting and verification in accordance with guidelines adopted by the Conference of Parties.” Other actions would fall under domestic measurement reporting and verification instead.
Completion date
The proposed text, still legally non-binding, offered no timetable for writing a legally binding accord. Initial drafts had set a goal of no later than the next Conference of Parties meeting in Mexico in 2010.
biznewsasia@gmail.com
The biggest story of 2009
The biggest story of 2009
As the year draws to a close, may I point out the biggest story of 2009, for us Filipinos. It is not the Maguindanao massacre in which 57 people were killed by perhaps the most notorious and ruthless warlord clan ever to thrive on these islands. It is not the death of Michael Jackson. It is not the election of Barack Obama as the first black president of America.
It is the not the death of Corazon Aquino on Aug. 1 which catapulted to No. 1 the presidential candidacy of Noynoy Aquino whose lackluster nine years as congressman and barely three years as senator make me wonder whether the Filipino voter is indeed intelligent.
Noynoy’s presidential bid reminds me of the late Senator Ted Kennedy. His brother, President JFK, was assassinated. A second brother, the presidential frontrunner and almost president, RFK, was assassinated. Ted himself was eminently qualified, being a Harvard Law graduate and a reformist liberal senator who had chalked up a strong 18-year legislative record focused on economic and social justice by the time he sought the presidency in 1980 with a 2 to 1 advantage over Jimmy Carter in early polls. Yet, when he was asked why he was running for president, Ted couldn’t adequately explain why. His resurgent campaign suddenly fizzled out. He was beaten in the Democratic convention by the unpopular incumbent, a peanut farmer, who was easily defeated by a second-rate actor, Ronald Reagan. Ted’s dream died with him.
The biggest story is the fact that the Philippines escaped the recession while two-thirds of the world suffered from it. And that is a tribute to the Filipino consumer who kept spending his money. Almost a third, 27.7 percent, of his income is savings. It is also a tribute to the reforms carried out by President Arroyo who presided over the longest economic expansion in the history of this country (35 quarters of consecutive growth). The Filipino people repaid her with spite, making her the most hated president in history. In such a vacuum came Noynoy. He wants to be the opposite of everything bad in Gloria.
The Philippines is one of the few countries in the Asia, and in fact, the world, whose economy is still growing, with a 0.7 percent GDP growth in the third quarter. In Asia, four other major countries are growing – China 8.9 percent, Indonesia 4.2 percent, South Korea and Singapore, both with identical 0.6 GDP growth in the third quarter.
In the rest of the world, Denmark leads the recession with negative 7.2 percent growth in the third quarter. No wonder Copenhagen badly mismanaged the climate change summit. Not far behind in negative growth are Britain (which Obama gingerly ignored in fashioning out a last-minute climate deal with China, India, Brazil and South Africa) with minus 5.1 percent; Germany 4.8; Japan 4.5 percent; Euro area 4.1 percent; US 2.5 percent; and France 2.4 percent.
In Asia, Malaysia had 1.2 percent negative growth in the third quarter, Thailand 2.8 percent, Hongkong 2.4 percent, and Taiwan 1.3 percent.
Happily, the global recession ended in the third quarter. It raged for two years and was the worst in 60 years.
Bangko Sentral Governor Amando Tetangco says “The (Philippine) economy continued to draw strength from strong domestic demand and solid macroeconomic fundamentals.” “For many economies,” he noted, “the experience during this crisis has been characterized by the ‘vicious spiral’ wherein weaknesses in the financial markets propagated real market contractions.” BSP helped rescue the Philippines from recession, financial meltdown and freezing of credit with what Tetangco calls “monetary policy that was appropriately accommodative”. In other words, money was easy and cheap.
Of course, inflation spiked to 9.3 percent in 2008 from 2.8 percent in 2007. It has eased to 3.2 percent in the January-November this year. The country today has enough dollars to pay for its imports, service foreign loans, and cover capital outflows. The balance of payments was in surplus by $4.1 billion in November and foreign reserves are at $44.2 billion which can buy 8.1 months of imports and can pay 9.2 times of short-term foreign debts.
If recovery is slow in the country’s major markets, it could hurt exports and slow down inflow of investments. But then the Philippines has ten million overseas workers. They will remit an estimated $17 billion this year and another $18 billion in 2010. Bansan Choa of I-Remit estimates that OFWs remit only about 35 percent of their total income. So if $18 billion is 35 percent, then Filipinos abroad are actually earning $51 billion a year, enough to pay our foreign debts.
The conclusion then: The economy will be better in 2010. Consumption will remain strong. And so will the Filipino’s will to survive and stay happy. Merry Christmas.
biznewsasia@gmail.com
As the year draws to a close, may I point out the biggest story of 2009, for us Filipinos. It is not the Maguindanao massacre in which 57 people were killed by perhaps the most notorious and ruthless warlord clan ever to thrive on these islands. It is not the death of Michael Jackson. It is not the election of Barack Obama as the first black president of America.
It is the not the death of Corazon Aquino on Aug. 1 which catapulted to No. 1 the presidential candidacy of Noynoy Aquino whose lackluster nine years as congressman and barely three years as senator make me wonder whether the Filipino voter is indeed intelligent.
Noynoy’s presidential bid reminds me of the late Senator Ted Kennedy. His brother, President JFK, was assassinated. A second brother, the presidential frontrunner and almost president, RFK, was assassinated. Ted himself was eminently qualified, being a Harvard Law graduate and a reformist liberal senator who had chalked up a strong 18-year legislative record focused on economic and social justice by the time he sought the presidency in 1980 with a 2 to 1 advantage over Jimmy Carter in early polls. Yet, when he was asked why he was running for president, Ted couldn’t adequately explain why. His resurgent campaign suddenly fizzled out. He was beaten in the Democratic convention by the unpopular incumbent, a peanut farmer, who was easily defeated by a second-rate actor, Ronald Reagan. Ted’s dream died with him.
The biggest story is the fact that the Philippines escaped the recession while two-thirds of the world suffered from it. And that is a tribute to the Filipino consumer who kept spending his money. Almost a third, 27.7 percent, of his income is savings. It is also a tribute to the reforms carried out by President Arroyo who presided over the longest economic expansion in the history of this country (35 quarters of consecutive growth). The Filipino people repaid her with spite, making her the most hated president in history. In such a vacuum came Noynoy. He wants to be the opposite of everything bad in Gloria.
The Philippines is one of the few countries in the Asia, and in fact, the world, whose economy is still growing, with a 0.7 percent GDP growth in the third quarter. In Asia, four other major countries are growing – China 8.9 percent, Indonesia 4.2 percent, South Korea and Singapore, both with identical 0.6 GDP growth in the third quarter.
In the rest of the world, Denmark leads the recession with negative 7.2 percent growth in the third quarter. No wonder Copenhagen badly mismanaged the climate change summit. Not far behind in negative growth are Britain (which Obama gingerly ignored in fashioning out a last-minute climate deal with China, India, Brazil and South Africa) with minus 5.1 percent; Germany 4.8; Japan 4.5 percent; Euro area 4.1 percent; US 2.5 percent; and France 2.4 percent.
In Asia, Malaysia had 1.2 percent negative growth in the third quarter, Thailand 2.8 percent, Hongkong 2.4 percent, and Taiwan 1.3 percent.
Happily, the global recession ended in the third quarter. It raged for two years and was the worst in 60 years.
Bangko Sentral Governor Amando Tetangco says “The (Philippine) economy continued to draw strength from strong domestic demand and solid macroeconomic fundamentals.” “For many economies,” he noted, “the experience during this crisis has been characterized by the ‘vicious spiral’ wherein weaknesses in the financial markets propagated real market contractions.” BSP helped rescue the Philippines from recession, financial meltdown and freezing of credit with what Tetangco calls “monetary policy that was appropriately accommodative”. In other words, money was easy and cheap.
Of course, inflation spiked to 9.3 percent in 2008 from 2.8 percent in 2007. It has eased to 3.2 percent in the January-November this year. The country today has enough dollars to pay for its imports, service foreign loans, and cover capital outflows. The balance of payments was in surplus by $4.1 billion in November and foreign reserves are at $44.2 billion which can buy 8.1 months of imports and can pay 9.2 times of short-term foreign debts.
If recovery is slow in the country’s major markets, it could hurt exports and slow down inflow of investments. But then the Philippines has ten million overseas workers. They will remit an estimated $17 billion this year and another $18 billion in 2010. Bansan Choa of I-Remit estimates that OFWs remit only about 35 percent of their total income. So if $18 billion is 35 percent, then Filipinos abroad are actually earning $51 billion a year, enough to pay our foreign debts.
The conclusion then: The economy will be better in 2010. Consumption will remain strong. And so will the Filipino’s will to survive and stay happy. Merry Christmas.
biznewsasia@gmail.com
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