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."