, January 19, 2005
(STAR) BULL MARKET, BULL SHEET By Wilson Lee Flores  -  Despite my having not voted for the re-election of President Gloria Macapagal Arroyo, I believe that the tremendous pressures of the high foreign debt, the government fiscal crisis and her unprecedented low popularity polls will force her to become a much improved leader this year. She already wrested victory from a contentious election, so it doesn’t make sense for her this year to sacrifice economic common sense for purely politically expedient moves. This should be a good year for her to really buckle down and work on the battered economy.

The dinner reception last Jan. 12 at Malacañang Palace marking the 60th anniversary of the Manila Overseas Press Club (MOPC) became a unique forum for President Arroyo to dialogue with the local and foreign media, with lots of local businessmen and foreign investors in attendance. In her speech and replies to questions, GMA promised not to discuss constitutional change issues for one year, that her government will push anti-corruption measures and that she will defer much of her scheduled foreign trips, since she is now focusing on raising state revenues with new taxes and solving the record-high budget deficit problem. GMA described 2005 as "a year of urgent change and fervent hope."

Beer, Cell Cards, Mining, Metal Caskets, Japayukis

Throughout her prepared speech and the open forum with the media and business leaders, GMA mentioned several "silver linings" and possible sources of hope for a better Philippine economy:

• GMA claims macroenomic growth of six percent last year "was a pleasant surprise in the region." The former economics professor also lengthily discussed her disagreement with the erroneous computing of the country’s unemployment figures, thus claiming that the number of jobless Filipinos is actually lower than previously reported. She cited San Miguel Corporation’s record high beer sales as partly due to the high prices of coconuts, stating that coconut farmers love to drink beer and can spend more for their kids’ studies. She also pointed out that next to vinegar, the No. 2 most popular products being sold in sari-sari stores nationwide are cell phone cards.

BULL MARKET: True, positive economic growth is healthy for the Philippines, and this was achieved despite the uncertainties of the 2004 election, the scare caused by GMA’s announcing of the government’s "fiscal crisis" and other problems. Consistent macroeconomic growth trends is good for the Philippine image internationally, especially for the foreign banks and foreign investors. If indeed true, reports of higher beer sales nationwide is good news since it has been considered as a traditional barometer of the people’s happiness.

BULL SHEET: I am very skeptical about statistical mumbo-jumbo and hair-splitting about unemployment data. What matters is government should vigorously move to drastically improve the investment climate. I suggest that GMA and her propagandists stop using the inane example of phenomenal sales of cell phone cards as part of their good news repertoire. Cell cards and text messages are addictive, and cell card sales may not necessarily reflect the true well-being of the masses. The robust profits of telecom firms augur well for the Philippine stock market, for their stockholders and segments of the national economy, but cell cards are not essential commodities like foods, education, housing or savings which improve the people’s quality of life. Strong sales of cell cards are OK, but I prefer to witness the flourishing of manufacturing factories, tourism enterprises and agricultural ventures which have more positive impact on the Philippine economy in terms of new jobs and new investments. Have our political leaders and their propagandists examined the big negative impact of multi-billion cell card sales on consumer spending for groceries, foods, savings, education, books and even other forms of entertainment?

• GMA reported that last year saw the lowest incidence of labor strikes in 30 years and she added: "The Filipino-Chinese business community is here, they can attest that the incidence of kidnap-for-ransom crimes is low last year." She also reported that the Supreme Court decision opening the mining industry last year will be a great boost to the Philippine economy, that the Philippines is the world’s fifth mining power, that China is interested to invest here as told to her recently in Jakarta by Chinese Premier Wen Jiabao, and that our mining resources are "six times our total foreign debt."

BULL MARKET: True, there has been less kidnappings reported by the mass media or anti-crime watch groups last year. Hopefully, this situation can be sustained, for peace and order is the No. 1 concern of numerous foreign investors and tourists. If labor statistics are accurate on less strikes, this should be welcome news for the countryís entrepreneurs. One of the really big good news for the Philippine economy is the sleeping giant of the mining industry, this will hopefully generate significant foreign investment inflows and boost the country’s export revenues.

BULL SHEET: More than a lull in the rampant kidnap-for-ransom crimes of recent years, foreign tourist and investment inflows will start coming to the Philippines if this trend can be sustained for years. Though kidnappings have gone down, there has been a lot of grumblings among business people about the unabated smuggling threatening to wipe out many of the country’s manufacturers and legitimate traders. When can the government decisively put a stop to the flood of smuggled goods all over the country? More than just the decline in the number of labor strikes, a lot of businesses want comprehensive reforms of labor laws and regulations which can make the Philippines competitive compared to Thailand or Vietnam. Hopefully, the government can move decisively to modernize and open up the mining industry, but is the state ready to quell threats by rebels group like the New People’s Army (NPA) and other subversives? Does the government have the political will and the capabilities to crush the rebels?

• On the recent tsunami calamity which hit our neighbors in South Asia, GMA reported that the Philippine government offered aid in human resources, plus donations of metal caskets through the Philippine Chamber of Commerce and Industry (PCCI) led by its president, Donald Dee. Apart from being cheaper, she said, "metal caskets are more environmentally-friendly than wooden caskets." On the controversy of Japan’s non-approval of visas for the country’s Japayuki entertainers, Foreign Affairs Secretary Alberto Romulo reported that GMA asked him to confer with the Japanese foreign minister recently in Jakarta on the matter. He said the Japanese official expressed concern on the entry of prostitutes masquerading as entertainers, but Romulo said he is not aware of the Japayuki problem there because his department was lobbying only for the continued entry of legitimate entertainers. Trade and Industry Secretary Cesar Purisima reported that since the economies of the Philippines and Japan are complementary, the proposed free trade arrangement between the two nations will benefit the country in terms of more agricultural exports, more exports of health care workers and other OFWs.

BULL MARKET: Philippine offers of assistance, no matter how small, is good for the country’s international reputation. The country’s actively engaging Japan in trade and other negotiations will hopefully advance Philippine economic interests.

BULL SHEET: It is not proper to benefit from the tsunami misfortunes of our neighbors, but what are the decisive steps of government to aggressively promote the Philippines as a tourism alternative to South Asia in these times? This is a golden opportunity for the Philippines to rise and shine in tourism, where we have so much potentials to be world-class. But where are the new facilities and where are the additional marketing funds for tourism promotions? Despite the controversies involving the NAIA 3 airport, its opening this year will support Philippine tourism. But will further legal problems derail its opening?

On the proposed free trade arrangement with Japan, a top official of an American multinational firm told me that Japan’s economy is a hundred times bigger than the Philippine economy and if adequate safeguards are not set, a flood of Japanese junks like second-hand vehicles, used appliances and other goods will be dumped into the Philippine market. This executive of a US firm also asked me why the Philippines is rushing into a free trade arrangement with Japan ahead of the richer and more industrially-advanced Malaysian and Thai economies.

Can GMA Overcome Crises To Be A Bold Reformer?

Despite the storm clouds confronting the country, it is highly probable that GMA will be able muster the guts and the will to steer the Philippine economy towards an economic turnaround this year. Hopefully, she can marshall her proven political talents and seemingly boundless energies into progressive socio-economic initiatives. Hopefully, she can overcome her insecurities, to become a bold reformist leader. Hopefully, she can dump many of the incompetent sycophants and leeches around her who may be painting unrealistic rosy scenarios of a so-called Strong Republic or false illusions about the true state of the Philippine economy. Hopefully, she can open her eyes to the harsh realities outside her air-conditioned palace and listen to the needs of the business sector and the agonized cries of the hungry masses. In the past three years, she was obviously preoccupied with the political campaign, instead of governing, in preparation for her running in the recently concluded elections. Now, she should run for an exalted name in history.

GMA has the unique and unrivalled opportunity to become a great leader of the Philippines, or be a magnificent failure. Due to the fiscal crisis compelling all sectors to take bitter pills of reforms, with her control of both chambers of Philippine Congress and her new mandate, she can vigorously push for genuine and sweeping reforms if she wants to. Will she bite the bullet and finally lead?

There is an ancient Chinese proverb which says in the Hokkien dialect: "Si-se cho yeng-hiong," which means "Turbulent times can create heroes." Will the unpopular, much-maligned but politically cunning, smart and determined President GMA be able to rise to this exciting and historic challenge?

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Reported by: Sol Jose Vanzi

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