EVEN WITH THE PORK BARREL SCAM AND REBELLION, FORBES ASIA GIVES PHILIPPINES POSITIVE REVIEW

Economic Outlook

By Manny Pinol

www.mannypinol.com

Forbes Asia, the regional branch of the highly respected Forbes Magazine, has given the Philippines a very positive review calling the country’s economy as “robust.”

In an article posted in its website written by staff member Tim Ferguson, Forbes Media cited the Philippines as having a banner economic year in 2013 and pointed to President Aquino’s campaign against corruption as one of the contributing factors.

The positive review came in spite of the gigantic corruption scandal which has dragged many political personalities, including top Senators and Congressmen, to the pork barrel scam and the seeming unending conflict in the Southern Philippines.

Here is the Forbes Asia article about the Forgotten Philippines which appeared in the August 12, 2013 issue of the magazine:

“In many respects 2013 has been a banner year for the Philippines, with Asia’s best economic growth marks (if slowing lately) and improved public finances. The country’s better fortunes are captured in most of the personal valuations of its 50 richest; the latest can be seen here.

“But first you look at our new Best Under A Billion list of top 200 small to medium-size enterprises (SMEs) and you see the nation represented only by PhilWeb, an online extension of the longtime state gambling monopoly. To its credit, PhilWeb has been a BUB regular, but the Philippines itself has never had more than three companies on this list.

“The SME sector (most nations define it to include considerably smaller companies than we do on our list) is a barometer of an important element of any sustainable growth story, as these are the companies that can account for considerable job creation as well as new instances of personal wealth. Where there are fewer standouts, it may mean that the economy is too concentrated in the hands of larger groups (or government) and that it lacks sufficient financing vehicles, particularly equity markets in the case of listed firms such as those on our BUB. More benignly, it can also be a sign of significant foreign direct investment, such as is increasing in Southeast Asia. However, that capital, as well as the sizable remittances from abroad that are a Philippine mainstay, should in turn lead to spinoff domestic ventures.

“Going back to the late 1990s, researchers have found that the Philippines (as well as Thailand and Indonesia) had underdeveloped SME sectors–a phenomenon reflected in the BUB.

“At that time China also had this problem, which it evidently no longer does, even if financing remains a woe for many private concerns.

“Surely the Philippines has recognized this deficit–indeed, it has been adopting official policies for decades to try to address it. (One of them, in 1991, was even called the Magna Carta for Small Enterprises.) Still, the results have been disappointing. A few more years of outstanding GDP may begin to make a difference–a company like Megawide Construction will soon have enough years as a traded stock to qualify for the BUB–but more likely it’s going to take more concerted efforts to break down barriers to homegrown “gazelle” startups, as fast-growth outfits are known.

“President Benigno “Noynoy” Aquino gets high marks for early steps to curb corruption and other impediments to honest capitalism. He also has been intent on projecting Philippine military strength in the South China Sea. A vibrant SME sector, however, may be the surest way to secure the national future.”

(Credit: This image of a suit representing the Philippine quad-colors was downloaded from the Forbes Asia website.)

Source: Manny Piñol