Philippines: Asian’s Next (Surprising) Tiger?
By Shlomo Maital
According to Richard Javad Heydarian, who teaches political science and international relations at the Ateneo De Manila University, “Philippines — along the likes of Mexico – has transformed into one of the most promising emerging markets in the early-21st century.”
This is astonishing, because just six months ago, Philippines was hit by a devastating typhoon. Despite this, it has averaged 7% GDP growth in the past 2 years! This is close to China’s rate.
“Under the stewardship of the Aquino administration, there has been greater commitment to “good governance”, as exemplified by the ongoing anti-corruption initiatives and investigations. Host to about $300 billion in untapped mineral reserves, Mindanao is poised to benefit from large-scale foreign investments amid an increasingly promising peace process, which has paved the way for the establishment of the Bangsamoro state. No wonder, given our country’s youthful population, natural resources, myriad of tourist attractions, and huge reserve of skilled labor, it has become fashionable these days to talk about the Philippines as the new tiger economy of Asia.”
Emerging market economies in China, Brazil, Russia, and India all have been grappling with inflation, slowing growth, and policy paralysis that undermine decades of robust economic expansion, Heydarian notes.
According to Bloomberg, “Gross domestic product rose 7.2 percent in 2013, the Philippine Statistics Authority said in Manila today, after gaining 6.8 percent in the previous year. That was the fastest two-year pace since 1954-1955.”
A major problem with this stellar growth is that it is not trickling down, and is not benefitting the working classes. This is a common phenomenon in emerging market countries. Heydarian writes, “Poverty and unemployment figures have hardly changed, while inequality is intensifying. Few major businesses swallow newly-generated growth, while the majority of the population is yet to benefit from the recent economic boom.”
Can Philippines sustain its growth? Many Filipinos work abroad; their remittances fuel high domestic consumption. There has been a real estate boom as well, and a boom in services. A fifth of the Philippine government’s national budget goes to debt service, leaving too little for health and education.
Philippines can leverage a pro-China strategy, pulling in investment that may leave Vietnam and Indonesia, in the wake of anti-China sentiment. Philippines too has maritime disputes with China, but seems to have handled them wisely. If other southeast Asia nations let the left-brain emotions govern their right-brain logic, Philippines stands to gain.
Could we perhaps hope that Philippines will finally build a world-class airport? Manila has been voted recently “the world’s worst airport”. Filipinos and travelers deserve better.