The Philippines: A reality check

Jamil Maidan Flores, Jakarta

On the eve of the observance of the 107th anniversary of the proclamation of Philippine independence, there seems to be little to celebrate, if you go by all the bad news bannered by the newspapers and blared by the other media.

There is a persistent threat of a coup, corruption is rampant, the unemployment rate is over ten percent, the inflation rate is transfixed at a six-year high, the economy as a whole is slowing down because of high oil prices, the fiscal deficit is huge and the national debt is hefty.

And President Gloria Macapagal Arroyo's popularity is at rock bottom, largely because so many expected her to make an economic miracle that no human being could possibly perform, and she didn't.

All these are true, and there is plenty more unsavory news that could be raked up if one had the taste for it. But these do not form the whole picture. They are the many dark patches in a chiaroscuro.

The reality is a great deal more prepossessing than the portrait painted by a national mass media enamored with scandal.

In 2004, the gross domestic product grew by six percent, one of the highest ever achieved in many years. This is not the first time the economy grew --it has been growing for the past six years.

That growth has been bolstered by consumption, owing to the usual vigorous flow of remittances from overseas Filipino workers. For the first three months of this year, such remittances totaled $2.3 billion, or almost 17 percent over their level for the same period last year.

But that represents only the recorded remittances. Including the unrecorded remittances, the total for any given year should easily exceed $10 billion. At any rate, because of these remittances, the country's balance of payments has been positive for the past several years and will be positive in many years to come.

Interest rates have been going down, although the overnight interest rate may be hiked a bit in the days to come as a reaction to inflation which seems to have been nailed at a little over eight percent.

Exports, at $39.6 billion, grew by 9.3 percent last year. These have been growing for the past four years.

Last year, foreign direct investments grew by a whopping 409 percent. Local investments rose by 79 percent. If these are not proof of investor confidence, nothing is.

Of increasing interest to many investors today is the mining sector, which once was a major foreign currency earner for the country until misguided conservationist pressures forced mining projects to shut down.

Portfolio investments are also on the rise. During the first three months of this year, a total of $1.72 billion in portfolio investments rushed into the country, sending the Philippine Stock Exchange Index up to a six-year high.

That came about soon after the Financial Action Task Force on Money Laundering lifted the Philippines from the list of Non- Cooperative Countries and Territories.

Earlier, in January, when the Philippine Government sold $1.5 billion in bonds, investors actually ordered five times more than the amount of securities made available.

Early this month, the World Bank announced a new three-year assistance plan to help fund high quality programs to be carried out by the Philippine Government.

Even the tourists are coming back. Last year 2.3 million tourists visited the country, many of them in defiance of the gloomy advisories of their governments.

Revenues are up: last April, collections amounted to 62.9 billion pesos, the highest in human memory.

And if current positive trends continue in Mindanao, a peace pact may be signed between the Government and the Moro Islamic Liberation Front (MILF) in the very near future. That would give peace-- and development-- a chance to flourish where they have been missing for decades.

Perhaps the most significant good news from the Philippines today is one perceived as so evil by the Presidents legions of critics that they called on her to resign while burning her in effigy.

This is the signing into law of a measure that would increase corporate income tax from 32 to 35 percent and would authorize the president to increase the value added tax (VAT) by two percentage points to 12 percent come next January. It has been denounced to high heaven as an act of cruelty to the poor.

In fact the measure prevents a financial meltdown a la Argentina, squarely addresses the problem of the budget deficit, and assures investors that the government is serious about tackling the country's most basic economic woes.

And, in fact, when the bright spots and the dark patches of the national situation are brought together and regarded in proper perspective, the picture that is formed of the national situation will not win beauty contests, but it is not anything hopelessly loathsome either.

The reality is that the situation is not the best that it can be, nor the worst. It is bad enough that something must be done about it very soon. And yet good enough to promise with credibility a much better time to come.

But first, there must be a sufficient mass of citizens doing constructive things, helping one another, instead of waiting for the President to revise, with superhuman powers she does not have, the laws of economics -- and instead of wallowing in the malicious enjoyment of scandal.