RP economy slips back into a coma<\/p>\n
MANILA (DPA): The Philippines has once again become the \"sick
\nman of Asia\" with the economy slipping back into a coma amid the
\ncountry's worst political crisis in years.<\/p>\n
The Manila-based Asian Development Bank (ADB) said the
\ncountry's gross domestic product (GDP) was expected to grow by
\nonly 3.8 percent in 2000, one of the lowest among Southeast Asian
\nnations. In 2001, the ADB said GDP growth would slow down to 3.3
\npercent.<\/p>\n
\"It could be worse,\" said ADB senior economist Ernesto Pernia.
\n\"The 3.3 percent is probably on the medium variant. It could
\nworsen if conditions worsen.\"<\/p>\n
While the Philippines was least affected by the financial
\ncrisis that plagued the region in mid-1997, the country's economy
\nfailed to recover as strongly as was expected and even began to
\nslide when President Joseph Estrada assumed the top post in mid-
\n1998.<\/p>\n
Analysts said a lack of confidence in Estrada, who has faced
\none scandal after another during his 29-month rule, was a major
\nfactor in the economy's deterioration. But they noted the problem
\ngoes beyond the political scenario.<\/p>\n
\"Political factors do tend to temper enthusiasm,\" said
\neconomic analyst Antonio Gatmaitan. \"But if there are
\nopportunities, investments will come in and the economy will move
\nforward.\"<\/p>\n
From the very start, Estrada's \"take-away from rich and give
\nit to the poor\" Robin Hood-rhetoric had made the private sector
\nuneasy. The business community also doubted the former movie
\nactor's morality and leadership skills.<\/p>\n
The \"confidence crisis\" worsened in early 2000 when former
\nSecurities and Exchange Commission chief Perfecto Yasay accused
\nthe president of intervening in a stock manipulation
\ninvestigation to protect a friend.<\/p>\n
A major military offensive against Moslem separatist rebels, a
\nwave of bomb attacks in the southern region of Mindanao and the
\ncapital and a hostage crisis involving foreign captives did not
\nhelp boost sentiments.<\/p>\n
But what brought the house down was the accusations in October
\nby an estranged friend that Estrada collected more than US$8
\nmillion in illegal gambling payoffs and pocketed more than $2.6
\nmillion in kickbacks from tobacco taxes.<\/p>\n
The controversy - which led to the impeachment of Estrada, who
\nis now on trial before a Senate tribunal - caused the peso to
\nplunge to a historic low of 51.95 to one U.S. dollar and the
\nstock market to fall to two-year lows.<\/p>\n
\"The impeachment trial is the culmination of the undercurrent
\nof disagreements the private sector has had with the government,\"
\nsaid economic analyst Antonio Gatmaitan.<\/p>\n
With many business groups calling on Estrada's resignation due
\nto the scandal, Gatmaitan said the political instability has made
\n\"priming the economy\" a more difficult task since the private
\nsector has abrogated its partnership with the president.<\/p>\n
\"We are in a private enterprise system,\" he noted. \"We count
\non the private sector for most of the initiatives in establishing
\nthe capacities that we need - the kind of industries that we
\nneed.\"<\/p>\n
\"The challenge to the government is to make sure that the
\nprivate sector is satisfied with its own gameplan,\" he added.<\/p>\n
But Gatmaitan stressed that the Estrada debacle was not alone
\nto be blamed for the country's failure to extricate itself from
\nthe boom-bust cycle that has characterized the economy since it
\nwas granted independence by the United States in 1946.<\/p>\n
\"We don't have a strong foundation,\" he said. \"Our growth
\nfigures are still very much dependent on what happens to
\nagriculture. The modern sector of our economy is still small in
\ncontrast to the overall picture of what a modern robust economy
\nshould be.\"<\/p>\n
Gatmaitan cited poor infrastructure, lack of manufacturing
\ncapabilities and undeveloped or underdeveloped \"strategic\"
\nindustries, such as petrochemical, steel and construction.<\/p>\n
In its annual Asian Development Outlook in April, the ADB
\nnoted that the slow growth in the Philippines' industry sector
\n\"has been symptomatic\" of the country's economic performance in
\nrecent years.<\/p>\n
\"The industrial share in GDP has shrunk from more than 40
\npercent two decades ago to around 35 percent in 1998, in contrast
\nto the strong industrial growth in neighboring countries, such as
\nMalaysia and Thailand,\" the report said.<\/p>\n
The report also lamented that the Philippines has lagged
\nbehind many of its neighbors in physical infrastructure to
\nsupport the industrialization and general development efforts.<\/p>\n
\"Poor roads, inadequate port facilities and expensive power
\nhave increased cost and reduced economic efficiency,\" the ADB
\nsaid.<\/p>\n
Gatmaitan said the government also needs to come up with a
\nmore comprehensive economic plan that would serve as a roadmap
\nfor foreign and domestic investors. He noted the government's
\ncurrent 5-year medium term development plan needs a lot of re-
\nwork in the face of the current developments.<\/p>\n
\"There are still a lot of backward things,\" he said. \"As we
\nmodernize, our economy must be dependent more on modern
\nindustries and high-value services.\"<\/p>",
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