RP recovers sluggishly from Asian crisis

RP recovers sluggishly from Asian crisis

By Mynardo Macaraig

MANILA (AFP): After weathering the Asian financial crisis
relatively better than its neighbors, the Philippines has failed
to live up to earlier hopes it would be among the fastest-growing
economies in the region when it rebounds.

Political worries, substandard infrastructure, and a
perception that special favors are being granted to well-
connected people have emerged as some of the main concerns of
businesses under President Joseph Estrada, whose government is
facing growing criticism.

Philippine gross domestic product in 1999 grew by an
officially estimated 3.2 percent compared with an estimated four
percent in Thailand and more than 4.3 percent in Malaysia.

Among all the crisis-hit economies, South Korea was far the
star performer, posting estimated 10 percent growth in 1999,
while Indonesia, beset by political problems, saw flat growth.

In foreign direct investment, the Philippines received only
US$900 million in 1999, in contrast to the $7 billion received by
Thailand, $4.4 billion by South Korea and $1.2 billion by
Malaysia, the research group Economist Intelligence Unit (EIU)
said.

Only Indonesia did worse, getting only $500 million.

A survey of 45 chief executives of multinational corporations
conducted last May by EIU Philippines found poor transport
infrastructure, bureaucratic red tape and questions about policy
stability were their main concerns.

"The worst features were all government-related. Things the
government could correct -- and has to, if it is truly serious
about attracting large levels of foreign investment," a summary
of the survey said.

Businessmen have also been grumbling about the leadership
style and business policies of Estrada, a populist ex-actor who
took power in June 1998 following a massive election landslide
but has seen his phenomenal popularity ratings tumble in recent
months.

EIU Philippines said the businessmen listed "cronyism and
corruption" among their areas of concern for the first time since
the surveys began ten years ago. In the Philippines, cronyism
means using political connections to gain lucrative business
advantages.

Another survey of 50 chief executives of major companies,
conducted by the think-tank W. Sycip Policy Center, found law and
order, lack of political stability, poor public transportation
and road infrastructure were considered the main concerns.

Although the business leaders credited Estrada with taking
action against crime, they also said his government was
underperforming in basic infrastructure, garbage services, urban
poverty and public transportation.

Monsignor Hernando Coronel, spokesman of the politically
influential Catholic Bishops Conference of the Philippines, said
"the special friends of the president, they have the favored and
preferred business deals."

"The playing field in business is not level and is not equal
for everybody," he told the local media.

Presidential spokesman Fernando Barican has argued that the
business surveys only reflect the image, not the reality.

He said if the businessmen were asked to relate a personal
experience where they lost a contract because of cronyism, "I'm
sure the answers would all be negative."

Peter Wallace, head of EIU Philippines Inc. concedes that
"much of this is driven by perception," and that despite their
complaints, "the reality is that multinationals here do well."

A Chase Manhattan Bank fact-finding group that visited the
country last week was upbeat on its prospects, saying "the bottom
line is that we are very bullish about the Philippines and we are
communicating that to our investors."