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Tuesday, February 28, 2012

On the investment boom, economic growth and People Power

By Tony Lopez

VIRTUAL REALITY

President Aquino recently spoke of a recent boom in investments in the Philippines. Indeed, there has been. Trade and Industry Secretary Greg Domingo tells me total approved investments in 2011 reached P800 billion for the first time.

The figure includes investments registered with the Philippine Economic Zone Authority of Director General Lilia de Lima and investments registered with the Board of Investments for incentives and other perks. Greg estimates that if projects registered with Clark Development Corp. and Subic Bay Metropolitan Authority were included, investments last year could very well have reached P1 trillion—a new high.

Wharton-educated, Greg doesn’t give a breakdown. I assume he is not lying. Equally extravagantly, Greg thinks economic growth this year (2012) will be 7 percent—the highest among forecasts. Most analysts think economic growth will be 5 percent or below, this year.

This is the real people power: Moneyed people and investors putting money where their mouth is.Not politicians and demagogues mouthing and shouting expletives in elegant language, English and Tagalog, and signifying substantially nothing, except that they hate their enemies.

By the way, our People Power has become a mongrel. You don’t know what it is now. Nearly everyone is mouthing People Power.

The original People Power, on February 22-25, 1986, was intended to remove a dictator who had been in power for 20 years, Ferdinand Marcos. He was succeeded by a math-major housewife, Corazon Cojuangco Aquino, who assumed the presidency without the benefit of an election. (Marcos had won the official vote count in the snap election of February 1986 simply because his home region of Ilocos and Cagayan Valley went 98 percent for him, overwhelming the anti-Marcos votes in Metro Manila and the other regions which went for Cory).

The second People Power, in January 2001, removed a hugely popular president, Joseph Estrada, who, 31 months earlier, was elected with the highest number of votes and biggest margin then (10 million vs. 6 million for the loser) ever cast for a presidential winner.

Estrada was succeeded by Vice President Gloria Macapagal Arroyo. In2004, GMA was elected president in her own right in an election which analysts claim she stolen, although the Social Weather Stations (SWS of Mahar Mangahas, which now idolizes PNoy for having a 70 percent job approval rating despite rising levels of poverty, hunger, unemployment andinflation) kept insisting she was really the winner.

The third People Power took place on the night of May 1, 2001. To me, this was the genuine People Power—pedestrians, ordinary civilians, the hoi polloi–picking up stones, knives, bolos and hand-made guns and rushing to Malacañang to drive out what they thought was an interloper.

They failed, of course. That People Power was not inspired by the Catholic Church. It was not fueled by the military. In fact, the military, under the now late unlamented Angelo Reyes, stood by Arroyo, and murdered some of the demonstrators, ala Bashar Assad.

Mrs. Arroyo once described to me this crowd as E3—as in EDSA Three, the masses of the poor and the dispossessed who never really improved their lot despite three so-called popular revolts. In 1986, a third of the population was considered poor.

Today, a third of the population is still poor. Since 1986, 31 million more Filipinos have been born, from 65 million to 96 million today. The number of poor actually increased even as the rich became infinitely richer. The richest 20 individuals in this country actually own 80 percent of the economy. Only 100 families own the politics of this country.

This is why it is significant when the richest 20 tycoons and taipans and the 100 political families (led by Aquino no less) get together, along with foreign investors, to create projects and create jobs.

They say the Philippines is great under President Aquino. His clarion call for matuwid na daan (straight path) has found resonance among investors.

And so, these investors have put up projects in a country that for too long has had a reputation for being corrupt and for being unsafe. Ask the Japanese. Their number one concern is safety. Indeed, there is a perceptible crime wave rising; a few people have told me some tycoons have been kidnapped in recent weeks. In at least a quarter of the crime incidents, the principal suspects are the police or people in uniform or in authority.

To be sure, the newly registered (for incentives) projects won’t be on stream until perhaps after two years. And some 20 percent of them don’t get into fruition. But the investment numbers are impressive.

During 2011, a year when economic growth was halved, investments at industrial and export zones operated by the Philippine Economic Zone Authority amounted to P288 billion, an increase of almost 41 percent or P83.9 billion over the P204.4 billion investments registered in 2009. The P288 billion is the biggest amount registered with PEZA in the past 16 years.

So is the nearly P84-billion jump in investments. PEZA has some 250 economic zones nationwide, with 2,625 locator companies.

The 41 percent increase is also the highest ever in 16 years of the PEZA under de Lima.

Because of the huge increase in both value and volume, cumulative investments with PEZA went past the P2-trillion mark for the first time in2011, to P2,000 billion or P2.0 trillion.

Now, P2 trillion at P45 to $1 is equivalent to $44.5 billion. Divide that by 16 years and you get $2.78 billion average annual investments by PEZA enterprises. Total direct employment at PEZA has reached 840,945.


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