EDITORIAL: GROWTH FOR EQUITABLE PROGRESS

Hailed as “one of the greatest economic comeback stories in recent years,” the Philippines is hosting the 23rd World Economic Forum on East Asia, which formally opens today in Makati’s Central Business District. It is the first time that the country, once regarded as Southeast Asia’s economic laggard, is hosting a regional event of the WEF. The forum provides an opportunity for the Philippines to attract more investments and visitors, and its theme is what the country needs: leveraging growth for equitable progress. This year the Philippines is expected to be the fastest growing economy in Southeast Asia, and more upgrades in its investment rating are seen. Administration officials attribute these gains to the campaign against corruption and focus on good governance. Economic managers, however, admit that inclusive growth continues to elude the country, and investment grade has not translated into levels of investment that can put the country at par with its more competitive neighbors. Low investment levels mean a continuing exodus of Filipinos for jobs overseas due to a dearth of decent employment opportunities in their own land. As recent official statistics have shown, sustained economic growth has also hardly made a dent on poverty, despite direct interventions such as the conditional cash transfer program. READ MORE...

ALSO: On a roll

On the economic front, the Aquino administration is on a roll. The strong growths in gross domestic product in the past two years are proof of this, and the international community is taking notice through the investment-grade ratings from Standard and Poor’s, Moody’s Investor Service, and Fitch Ratings. Asean finance officials are also holding an investors’ seminar today at the Manila Peninsula. Tomorrow until Friday, the Philippines is hosting the prestigious World Economic Forum on East Asia. Also tomorrow, a high-powered meeting of the Asean Business Club, an association of the chief executives of the region’s major business enterprises, will be held at the Fairmont Hotel. The Bangko Sentral ng Pilipinas captured the optimism pervading the government and the private sector when it predicted that another round of credit-rating upgrades for the Philippines was forthcoming after S&P adjusted early this month the Philippines’ sovereign rating to a notch above investment grade. As BSP Governor Amado Tetangco Jr. put it, other rating agencies would recognize, just as S&P had, the continued sound macroeconomic fundamentals of the country, and “this recognition will happen sooner rather than later.” READ MORE...

ALSO: Hosting WEF

The Philippines hosts the World Economic Forum (WEF) on East Asia attended by several world leaders, high-ranking government officials, and top business executives from various parts of the globe. Time to showcase PH gains under “straight path” or good governance, PNoy says. *** But as this develops, concerned sectors ask the President to rush efforts at attaining “inclusive growth” and speedily addressing major concerns like possible power shortage and the high cost of electricity. Time to look at the challenges ahead and to crack the whip. *** PH is proud to host Indonesian President Susilo BambangYudhoyono, Vietnamese Prime Minister Nguyen Tan Dung, Burmese Vice President U NyanTun , along with nine government ministers, and more than 100 business executives attending the WEF, says Finance Assistant Secretary Maria Teresa S. Habitan . Hosting is good for us from time to time — till we can afford to make it a habit. *** “The Philippine hosting of the World Economic Forum on East Asia, which happens for the first time in its 23 years in the region, is an opportunity to showcase the gains we have achieved by treading the straight path of good governance,” President Aquino says, keynoting the forum. Proud PNoy and proud Pinoys stand to be recognized, please. READ MORE...

ALSO: More truthful than his Finance secretary

His Excellency Benigno S. Aquino III, President of the Philippines, at the opening plenary session of the 23rd World Economic Forum on East Asia, gave a speech that, as expected, lauded the achievements of his administration. He drew a long bow, as the ancient idiom puts it, but he did not lie, he only exaggerated. The speech shows that Mr. Aquino is definitely a more truthful person than Finance Secretary Cesar Purisima. The Finance secretary’s being a liar is detailed in today’s page 1 column by Rigoberto Tiglao (photo below) titled “Purisima: Aquino’s biggest liar.” There Mr. Tiglao tells readers how Mr. Purisima dishonestly claims he and the Aquino regime caused all the great things that are happening to the Philippine economy since Mr. Aquino became president. That is simply not the truth.READ MORE...

(ALSO) Purisima: Aquino’s biggest liar

Finance Secretary Cesar Purisma must be one of President Aquino’s biggest liars. There may be actually bigger ones, but the trouble with Purisima is that he even broadcasts his deceptions, and conceals his complicity in what could have been an economic meltdown in 2005.
Purisima is the biggest liar since he has been spreading the biggest lie that, through constant repetition, unfortunately many believe: that our economic growth in the past four years has been due to Aquino’s daang-matuwid government. Purisima published in two mainstream newspapers at the start of the World Economic Forum for East Asia the other day his article “Good governance is good economics.” He wrote: “Reforms have the power to alter a country’s economic destiny. This is why they inspire confidence from markets, businesses and citizens. The Philippines provides an example of how reforms can change perception and reality.” That’s true of course. But then he goes on: ”Since assuming office in 2010, President Aquino III has transformed the country from being ‘the sick man of Asia’ to an economic success. He undertook reforms that economists have been urging and politicians shirking.” READ MORE...


READ FULL REPORTS HERE:

EDITORIAL - Growth for equitable progress

MANILA, MAY 26, 2014 (PHILSTAR) Hailed as “one of the greatest economic comeback stories in recent years,” the Philippines is hosting the 23rd World Economic Forum on East Asia, which formally opens today in Makati’s Central Business District. It is the first time that the country, once regarded as Southeast Asia’s economic laggard, is hosting a regional event of the WEF.

The forum provides an opportunity for the Philippines to attract more investments and visitors, and its theme is what the country needs: leveraging growth for equitable progress. This year the Philippines is expected to be the fastest growing economy in Southeast Asia, and more upgrades in its investment rating are seen. Administration officials attribute these gains to the campaign against corruption and focus on good governance.

Economic managers, however, admit that inclusive growth continues to elude the country, and investment grade has not translated into levels of investment that can put the country at par with its more competitive neighbors.

Low investment levels mean a continuing exodus of Filipinos for jobs overseas due to a dearth of decent employment opportunities in their own land. As recent official statistics have shown, sustained economic growth has also hardly made a dent on poverty, despite direct interventions such as the conditional cash transfer program.

Climate change is also threatening the gains of economic growth as weather disturbances that are considered bizarre wreak havoc across the archipelago. Food security, water and energy resources are also at risk as rising global temperatures alter weather patterns.

The WEF gathering in Manila seeks to discuss ideas on achieving equitable progress, advancing models for sustainable growth, and realizing regional connectivity. It is being held as the 10-member Association of Southeast Asian Nations prepares for economic integration within a year. Picking Manila as the host for the WEF regional event is a recognition of the country’s recent economic gains. Now the nation needs more reforms to make the growth equitable.

FROM THE INQUIRER

On a roll Philippine Daily Inquirer 12:12 am | Tuesday, May 20th, 2014

On the economic front, the Aquino administration is on a roll. The strong growths in gross domestic product in the past two years are proof of this, and the international community is taking notice through the investment-grade ratings from Standard and Poor’s, Moody’s Investor Service, and Fitch Ratings.

Asean finance officials are also holding an investors’ seminar today at the Manila Peninsula. Tomorrow until Friday, the Philippines is hosting the prestigious World Economic Forum on East Asia. Also tomorrow, a high-powered meeting of the Asean Business Club, an association of the chief executives of the region’s major business enterprises, will be held at the Fairmont Hotel.

The Bangko Sentral ng Pilipinas captured the optimism pervading the government and the private sector when it predicted that another round of credit-rating upgrades for the Philippines was forthcoming after S&P adjusted early this month the Philippines’ sovereign rating to a notch above investment grade.

As BSP Governor Amado Tetangco Jr. put it, other rating agencies would recognize, just as S&P had, the continued sound macroeconomic fundamentals of the country, and “this recognition will happen sooner rather than later.”

A new round of upgrades will definitely make the country even more attractive to foreign investors in the coming months.

Since the Aquino administration took over in 2010, fiscal and monetary policies have stabilized inflation, brought interest rates to historic lows, and attracted new investments.

Good governance reforms, on the other hand, have lifted the country’s rankings in global competitiveness surveys.

Tetangco is betting on Moody’s to give the Philippines its next credit-rating upgrade as it has had the country’s sovereign grade on “positive” watch since October 2013—an indication that an adjustment is due within a year.

A credit rating is an evaluation of a debtor’s ability to pay back debt. A sovereign credit rating is an evaluation of a national government as a borrower, and indicates the risks in the investment environment of a country. This is considered by foreign investors in deciding on where to put their money.

There are many benefits that the Philippines will derive from the investment-grade ratings—some tangible and some not. For instance, many institutional investment funds are banned by their own internal rules from putting money in countries with “junk” credit ratings.

With the Philippines finally ending last year its long history of junk-debt status, it has entered the radar screens of these investment funds. In 2013 the Philippines got investment-grade status from Fitch, then S&P, and finally Moody’s.

In that year, according to the BSP, foreign direct investments, the kind of money used to build new factories that generate jobs, jumped 20 percent.

An investment-grade rating is also a vote of confidence in the sustainability of economic growth. In upgrading the Philippines’ credit rating, S&P said: “We expect ongoing reforms on a broad range of structural, administrative, institutional and governance issues to endure beyond the term of the current administration.”

Another positive effect will be interest savings on the government’s burgeoning debt. Given the perception of its improved ability to repay its obligations, more creditors will be willing to extend loans to the government, which can then demand the lowest rate possible. Lower interest rates for government loans reduce the strain of debt servicing on taxpayers.

The savings on interest payments can then be channeled by the government to new infrastructure undertakings and other social projects that focus on education, healthcare and poverty alleviation.

The private sector also stands to benefit in terms of lower borrowing cost. Yields on government IOUs are used by banks in pricing their own loans to businesses and households. Lower interest rates on state-issued debt, therefore, will mean lower rates for bank loans. This will make it easier for companies to expand, which can in turn ease the joblessness in the country. Households will also benefit from lower rates for personal loans for car and home purchases.

Critics may say what they want about the Philippines’ getting investment-grade ratings. At the end of the day, the net effect of this credit status is that in the eyes of the international community, the Philippines is worth dealing with. It is, in our view, more than just an image effect.


Image world economic forum 2013 editorial cartoon by bladimer usi

FROM MANILA DAILY BULLETIN

Hosting WEF by Fred M. Lobo May 22, 2014

The Philippines hosts the World Economic Forum (WEF) on East Asia attended by several world leaders, high-ranking government officials, and top business executives from various parts of the globe.

Time to showcase PH gains under “straight path” or good governance, PNoy says.

***

But as this develops, concerned sectors ask the President to rush efforts at attaining “inclusive growth” and speedily addressing major concerns like possible power shortage and the high cost of electricity.

Time to look at the challenges ahead and to crack the whip.

***

PH is proud to host Indonesian President Susilo BambangYudhoyono, Vietnamese Prime Minister Nguyen Tan Dung, Burmese Vice President U NyanTun , along with nine government ministers, and more than 100 business executives attending the WEF, says Finance Assistant Secretary Maria Teresa S. Habitan .

Hosting is good for us from time to time — till we can afford to make it a habit.

***

“The Philippine hosting of the World Economic Forum on East Asia, which happens for the first time in its 23 years in the region, is an opportunity to showcase the gains we have achieved by treading the straight path of good governance,” President Aquino says, keynoting the forum.

Proud PNoy and proud Pinoys stand to be recognized, please.

***

“We are now Asia’s Bright Spot. We hope that our economic comeback story encourages everyone to take this opportunity to invest and ride the momentum of meaningful progress with us,” the President adds.

Translation: We’re back in business! Investors, please come back.

***

Based on the theme “Leveraging Growth for Equitable Progress,” participating finance ministers from Southeast Asia discuss current economic issues and put the finishing touches on the framework for ASEAN regional integration to begin in 2015, reports Finance Sec. Cesar Purisima.

Yes to East Asian cooperation and ASEAN integration. And more progress.

***

The calendar also includes the Financial Times-First Metro Philippines Investment Summit which started prior to the Young Global Leaders Forum , the 10th ASEAN Finance Ministers Investors Seminar (AFMIS) and ASEAN Business Club , the Young Leaders’ Meeting, and the 10th ASEAN Ministerial Meeting.

The more, the merrier.

***

Metropolitan Manila Development Authority (MMDA) General Manager Francis Tolentino has designated a special route for the delegates of the WEF, covering Ayala Avenue to Epifanio de los Santos Avenue (EDSA) and straight to Macapagal Boulevard going to the Philippine International Convention Center (PICC).

Let’s save our guests from the traffic mess.

***

President Aquino also meets with Prime Minister Nguyen Tan Dung and Indonesian President Susilo BambangYudhoyono to boost economic and security cooperation among their countries.

Time to tackle bilateral concerns, including the territorial dispute with China and other regional issues.

***

Presidential Communications Operations Secretary Herminio Coloma Jr. says the sharing of concerns is timely as the Philippines has protested China’s reclamation project in the Mabini (Johnson South) Reef while Vietnam has objected to China’s oil drilling in waters claimed by the former.

A sharing of common concern, wisdom and resolve could prove good.

FROM THE MANILA TIMES

More truthful than his Finance secretary


Benigno Aquino (right) with Finance Secretary Cesar Purisima at a media forum. Photo: EPA

His Excellency Benigno S. Aquino III, President of the Philippines, at the opening plenary session of the 23rd World Economic Forum on East Asia, gave a speech that, as expected, lauded the achievements of his administration. He drew a long bow, as the ancient idiom puts it, but he did not lie, he only exaggerated.

The speech shows that Mr. Aquino is definitely a more truthful person than Finance Secretary Cesar Purisima. The Finance secretary’s being a liar is detailed in today’s page 1 column by Rigoberto Tiglao titled “Purisima: Aquino’s biggest liar.”

There Mr. Tiglao tells readers how Mr. Purisima dishonestly claims he and the Aquino regime caused all the great things that are happening to the Philippine economy since Mr. Aquino became president. That is simply not the truth.

The World Bank itself says in its September 13, 2013 “Philippine Development Report” that “Fiscal consolidation in the last decade led to macroeconomic stability.” The last decade prior to September 2013 was largely years of the Gloria Macapagal-Arroyo presidency, during which the now under-hospital-arrest former president risked the ire of the Filipino people for making necessary economic decisions that established the sound foundations of our economy.

In fact, Cesar Purisima, when he was Mrs. Arroyo’s Finance secretary before he decamped and joined the anti-Arroyo camp, had resisted the much-criticized laws imposing the VAT. He also seemed to have undermined Arroyo’s unpopular moves to have laws passed raising the excise tax on tobacco and alcohol and introducing the Comprehensive Tax Reform Package.

The executives of the World Bank and other international institutions praised the daughter of the late President Diosdado Macapagal for these fiscal improvement measures. But the Yellow Army of the Aquinos together with leftists elements demonized Mrs. Arroyo.

These and other reforms introduced by the regime previous to the current one caused our economy to have unprecedented GDP rates of growth marking us as an “emerging economy” and leading to us being today’s so-called “new miracle economy of Asia.”

And yet Secretary Purisima dares to tell the lie that it was thanks to him and President Aquino that the present soundness of “the fundamentals” of our economy was established.

At least the President in his speech at the WEF yesterday afternoon simply kept referring to the support of “the Filipino people” as the reason for the good things in the economy and in our society now.

He said: “In 2010, it was once again the collective efforts of our people that helped me get elected me into office, after they took a stand, and firmly decided to turn their back on almost a decade of corruption and impunity—a decade of lost opportunities. My countrymen flocked to the voting stations to vote for the simple but profound idea that was the backbone of our campaign, and that is where there is no corruption, there will be no poverty.

To this day, the Filipino people provide the strength to sustain this effort. That is why when many of you have praised the achievements of the Philippines, we always point out that the pursuit of large-scale reforms in every aspect of governance is the achievement of the Filipino people. They made the goal of achieving inclusive growth doable, and it is also they who will make it irreversible.”

We have, however, to quibble about his calling the decade before he became president “a decade of lost opportunities.”

For that decade was when some of the now-great business houses in the food, retail merchandising and real estate industries began to surge. And also when great successes blessed the work of some of the almost a dozen Filipino businessmen-industrialist who are now among the world’s wealthiest persons.

And we must repeat our criticism of his slogan “where there is no corruption, there will be no poverty.” It invites the logical question: Sir, poverty, hunger and homelessness have increased under your watch. Does that mean that corruption has increased?

Yes is the answer. And the corruption involves Cabinet departments, especially that of Mr. Aquino’s Department of Budget and Management. It was after all the DBM that okayed the release of funds, as much as P10 billion, that is the major element in the outrageous PDAF/pork barrel scandal.

Purisima: Aquino’s biggest liar by RIGOBERTO D. TIGLAO  May 22, 2014 10:44 pm


Rigoberto Tiglao

Finance Secretary Cesar Purisma must be one of President Aquino’s biggest liars. There may be actually bigger ones, but the trouble with Purisima is that he even broadcasts his deceptions, and conceals his complicity in what could have been an economic meltdown in 2005.

Purisima is the biggest liar since he has been spreading the biggest lie that, through constant repetition, unfortunately many believe: that our economic growth in the past four years has been due to Aquino’s daang-matuwid government.

Purisima published in two mainstream newspapers at the start of the World Economic Forum for East Asia the other day his article “Good governance is good economics.”

He wrote: “Reforms have the power to alter a country’s economic destiny. This is why they inspire confidence from markets, businesses and citizens. The Philippines provides an example of how reforms can change perception and reality.”

That’s true of course. But then he goes on:
”Since assuming office in 2010, President Aquino III has transformed the country from being ‘the sick man of Asia’ to an economic success. He undertook reforms that economists have been urging and politicians shirking.”


Yet still bragging about it: Revenues as percentage of GDP, still below Arroyo peaks. Insert: Aquino and Purisima.

What reforms?

Purisima can name only one: “[T]he Sin Tax Law, which increased taxes on alcohol and tobacco products, and the revamping of commonplace procedures.”

But that law took effect only at the start of last year. And how much did that raise government revenues? Just 0.4 percent of the GDP value, according to the World Bank’s most recent economic update released March 2014.

Aquino and Purisima’s—supervision over the country’s fiscal situation is in fact not something to crow about. They even pushed for the “sin tax law” in desperation in 2013, as revenues were not improving as expected.

True, revenue effort in 2013, was 14.9 percent, higher than the 14 percent in 2009, former President Arroyo’s last full year in power.

But 2009 was the height of the global financial crisis that broke out in 2008, which hit nearly all countries, with the Philippines’ GDP growth rate slowing to 1.1 percent. The global economy has since bounced back from that crisis, with our own GDP galloping at 7.2 percent last year, yet government revenues haven’t increased significantly.

Efforts below Arroyo’s

The data (see accompanying chart above) based on the finance department’s own figures, show that the Aquino administration’s total revenue and tax efforts (total revenue and then taxes as a percentage of GDP) since it came to power has not even exceeded the peak 13.7 percent and 15. 6 respectively, of the Arroyo administration in 2006.

Why? Because other than the sin tax law, no other reforms have been undertaken. Purisima even has failed to prod the two bureaus under him, customs and internal revenue, to collect bigger amounts.

Aquino himself had admitted that smuggling had become rampant under his watch that even rice and vegetables, were being smuggled. Finally, after nearly two years of media exposes and much public outrage, did Aquino fire his buddy Ruffy Biazon as customs head only last December.

For all of Kim Henares high-profile campaign against tax evaders, even shaming doctors and celebrities as well as running after boxing champion Manny Pacquiao, the BIR’s revenues rose only to an insignificant 10 percent in 2012, still below the 10.4 percent peak in 2006 to 2007, during Arroyo’s watch.

Yet Purisima claims the Aquino regime’s mediocre results in revenue generation are responsible for making the country an “economic success story.”

So why has our economy been doing fairly well in the past four years?

Quite significantly, obviously a nudge to Aquino and Purisma that says “Don’t brag too much,” the World Bank’s September 13, 2013 Philippine Development Report had a highlighted box entitled “Fiscal consolidation in the last decade led to macroeconomic stability. “

The WB report’s important paragraphs (my emphasis):
“Tax administration measures were initiated in the revenue agencies in 2003 and 2004, which slowed but did not stop the decline in tax effort . . . The deficit of the power sector increased sharply, from 0.2 percent of GDP in 2001 to 1.8 percent of GDP in 2004 and was as pressing as the national government deficits.”

“After the 2004 elections, the government began to address the fiscal crisis seriously. In August 2004, President Arroyo declared a state of fiscal crisis and asked Congress to enact a number of tax policy reforms that included raising excise tax rates on tobacco and alcohol and a Comprehensive Tax Reform Package. “

“This package included, among others, i) removal of exemptions from value-added tax (VAT) on oil, power, medical, and legal services, ii) an increase in corporate income tax from 32 to 35 percent, before reverting to 30 percent in 2009, and iii) authority for the president to increase the VAT rate from 10 to 12 percent in January 2006 upon satisfaction of certain conditions prescribed by law . . .”

“The reforms significantly reduced fiscal and macroeconomic vulnerabilities and brought back investor confidence.”

“Higher tax revenues permitted the government to increase real spending in 2007 for the first time in seven years. The improving fiscal balance, aided by a steep appreciation of the peso, helped trim down the national government debt to 54 percent of GDP by end-2007 and then to 50 percent of GDP in 2011.”

The World Bank study concludes:
“The Arroyo Administration’s resolve to put its fiscal house in order was critical in bringing back macroeconomic stability.”

Stimulus package

Together with its P330-billion stimulus package that responded effectively to the 2008-2009 global crisis, the Arroyo administration’s fiscal reforms strengthened the country’s economic fundamentals, which Aquino and Purisima are now foolishly and dshonestly claiming credit for.

Does anyone in his right mind believe that Aquino’s campaign to remove Ombudsman Merceditas Gutierrez and Chief Justice Renato Corona, which ate up his time and political capital in his first two years in office, and later to imprison Senators Juan Ponce Enrile, Jinggoy Estrada, and Bong Revilla strengthened the country’s economic fundamentals?

The episode over the Comprehensive Tax Reform Package, which was contained mostly in the Expanded Value Added Tax Act, exposes Mr. Purisima’s character. You judge:
Arroyo had spent almost her time and expended all of her political capital in early 2005 to push for the Comprehensive Tax Reform Program. I was still in Arroyo’s Cabinet then and within her inner circle, and several of us were intrigued by Purisima, who became finance secretary February 15, 2005 because of Mar Roxas’ intense lobbying. Purisima then didn’t seem be keen in pushing the tax reform program. It was Arroyo herself who moving heaven and earth to have it passed, despite the very strong political and popular resistance against it.

Purisima tried to fuel anger against Arroyo by claiming that the E-Vat Law had triggered such a mass outrage against her that she ordered the Supreme Court to issue a temporary order to stop the implementation of the E-Vat law. (He was cited for contempt by the High Court and forced to eat his words.)

Purisima was one of the few people in the country who knew in much detail the depths of the country’s fiscal crisis at that time that required the E-Vat law. Yet right after its passage, he joined a conspiracy that added a political element to the emerging economic crisis.

If Arroyo had not pushed the E-Vat law or if Purisima’s Hyatt 10 conspiracy—that included the Liberal Party, Aquino, and his mother Corazon—succeeded in forcing her out, the country would have entered again another cycle of a fiscal crisis creating an economic crisis, resulting in a political instability and ultimately, as happened in 1986, a severe economic recession that would have thrown millions of Filipinos into poverty.

The E-Vat Law was finally passed in May 2005, which added fuel to the frenzy then against Arroyo. It turned out that Purisima was with the so-called Hyatt 10, who resigned on July 8, 2005 as part of a conspiracy to force Arroyo out.

Many thought that Purisima’s resignation would deliver the oust-Arroyo movement’s coup de grâce. While the market wouldn’t care much about the resignation of such officials as the secretaries for education (Abad) or social welfare (Soliman), it could panic with the finance secretary’s desertion. However, it didn’t, and his replacement Margarito Teves proved to be more capable than Purisima, and remained at his post five years until Arroyos term ended.

Most of us in the Cabinet, though, concluded that Mar Roxas had lobbied to get Purisima out as finance secretary in February as some kind of mole so that his resignation five months later could have a devastating impact on Arroyo’s government.

What gall this Purisima fellow has to lie and claim that his fiscal management and Aquino’s leadership are responsible for economic growth in the past four years.
tiglao.manilatimes@gmail.com


Chief News Editor: Sol Jose Vanzi

© Copyright, 2014 by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved


PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE