Philippine Economy blah-blah at the start of Year 2013

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So the economy is in the limelight again. Hmmmm…. What to say about the Philippine economy… hmmmm. What makes talking about the economy easy is that one need just highlight the same things again — that the Philippine economy is nothing more than an illusion propped up by “commercial activity” brought about by the flow of cheap food and trinkets imported from Australia and China, stockpiled in the nation’s malls, then marketed (a euphemism for shoving it through) to Filipino households, into their trash cans and crappers, ending up ultimately in the nation’s steaming landfills, cesspools, and septic tanks.

philippine_economyThis “commercial activity” is funded by cash remittances from the nation’s multi-million strong army of overseas foreign workers (OFWs) who prop up the hundred billion-odd dollar national economy to the tune of at least 10 percent of its value. Throw in the odd election and the accompanying orgy of campaign spending on bread, circuses, tarpaulin, and road works and you will be able to scrape together enough cash figures to balance your national balance-of-payments spreadsheet.

Check out this synopsis of a CNN “report” on the Philippine economy’s epic “surprise surge” of that day…

[…] consumption accounts for “value” contributed to the Philippine economy to the tune of 70% of output according to Credit-Suisse head of research for the Philippines Haj Narvaez. And what fuels that consumption? What else? “It is estimated that 11% of the population of 92 million work overseas. Remittances account for about 10% of the country’s GDP, which totaled $225 billion in 2011.” Add to that is that other saving grace of the Philippine economy, the call centre and business process outsourcing (BPO) industries that employ thousands of the finest Filipino university graduates; “These jobs are considered well — paid — enough for workers to afford, after several years’ employment, down payments on condominiums in Manila’s booming property market, Narvaez said.”

That blurb was written back in mid-2012. You can copy all that and paste it into one of those “news reports” that infest the front pages of the major newspapers of the country and label it as fresh February 2013 economic “reporting”. Nobody will notice. The “reporter” just need update the numbers a bit to the latest stats then add the usual seasoning, perhaps spokesperson Edwin Lacierda’s recent insistence that “Private-sector activity has been enabled by the Aquino administration’s dedication to positive reform. Without doubt, good governance means good economics.” Easy money comes to Malacañang reporters, indeed. How does one get a gig there?

When one hauls a containerload of Collezione t-shirts (the ones with the map of the Philippines embroidered on their left breast) imported from China from the pier, then disposes it in a market of “patriotic” fashionistas for five times its manufacturing and shipping costs, that difference becomes a contributor to that popular economic “indicator” favoured by spin doctors and publicists — the oft-quoted Gross Domestic Product (GDP). In that instance we pat ourselves on our backs for hosting a transaction that “added value” to the Philippine economy as measured by its GDP.

The real test of economic health hinges on the answer to a simple question:

Did that “value” add value of substance to the national wealth?

Was anything of lasting value actually created? Was any of that profit capitalised? Unforunately, Filipinos lack a concrete track record of building anything of true consequence. Rather than build an asset base of people, infrastructure, knowledge and expertise, and culture of enduring value, Filipinos spent the better part of the last half-century harvesting its low-hanging assets and exporting them raw as stop-gap measures to prop up a mediocre economy. Much of what Filipinos take pride for in their country is its natural beauty. But that is rapidly being physically degraded as well as overlooked because of peace-and-order issues in the remaining viriginal parts of the archipelago. That leaves the human achievement component of the intrinsic value of the Philippine Nation. Not surprisingly, while Filipinos get heaps of kudos from their foreign employers (and themselves) for being such hard workers, not much can be said about the collective design and innovation faculties of the society. Unfortunately it is in the furnaces of design and innovation that Capital (with a big “C”) is ultimately forged.

Design-added-value results in creation of enduring value. Even in stillness, a truly valuable painting or literary work, for example, can keep a viewer transfixed, spellbound and reflective; offering a richness and depth that continuously reveals subtle aspects of itself with every additional hour spent exploring it. Its value is inherent and stored. Its value is capitalised — a finite amount of labour input resulting in an immeasurable quantity of value continuously delivered over a timescale that transcends the labours of its creator. On the other hand, labour-added-value is fleeting and volatile. The value it yields over time is dependent on a sustained effort. The need for said effort can easily disappear in one of those turns in fortunes that are notoriously impossible to forecast — such as financial “crises”.

The trouble with GDP as a measure of economic value is that it is easy to fudge behind-the-scenes stories such as these. Notwithstanding that, the very methods with which GDP is calculated vary depending on who calculates, something that Manila Times columnist Ben Kritz points out in detail

Questions have already been raised about the reliability of the government’s GDP figures. In a column in these pages a couple weeks ago (“World Bank: 7.1 percent 3rd Quarter GDP Rate Could Be Wrong,” The Manila Times, January 14, 2013), Rigoberto Tiglao highlighted a problem identified in the World Bank’s Philippine Economic Update for December 2012, in which it was suggested that a “statistical discrepancy” of 1.4 percent accounted for part of the unexpected 7.1 percent GDP growth rate in the third quarter. The expectation of the World Bank was that the “zeroing out” of the full year’s statistical discrepancy — which is conventional practice in GDP reporting — would result in third quarter figures being adjusted downward, fourth quarter figures being in a more believable 5 percent to 6 percent range, or a combination of both. That did not happen; not only was the fourth quarter higher than expected, third quarter’s 7.1 percent was adjusted upward to 7.2 percent and the “statistical discrepancy” for the full year was not “zeroed out.” These results are highly unusual, and invite a deeper look at the real numbers behind the headlines; unfortunately, that investigation only seems to raise more questions than it answers.

Yikes!

If we cannot agree on a standard definition of what an inch is, then how are we to know whose penis is really bigger?

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14 Comments on “Philippine Economy blah-blah at the start of Year 2013”

  1. The philippines gdp growth is of course welcome, but, and it is a big but, without it being sustainable or inclusive then it counts for zero, to 95% of the population.

    And the signs are that it clearly is not sustainable, since the growth has nothing to do with infrastructure, manufacturing, foreign investment, and everything to do with a general upswing in asia, milking the ofw remittances cash cow, and an increase in illegal imports of cheap chinese products.

    The unemployment and poverty figures speak for themselves, and unless there is inclusive growth then the huge inequality gap will simply continue to increase

    I suspect the slowdown will occur in Q4 2014, but meantime the figures will be front and centre in the LP mid term election propaganda, with economic strategic planning still confined to the back of a cigarette packet.

    Exclusion from the trans pacific partnership (TPP) and no attempt to phase in greater foreign ownership will put the philippines at an even greater comparative disadvantage to its more ambitious and dynamic neighbours. This lethargy and lack of vision will cost the country dear.

    Leaving the pace and direction of economic development to the big 5 families as they carve up and cherry pick lucrative contracts/projects and then set monopoly pricing is the height of stupidity.

    Quick to blame others when things go wrong and even quicker to take credit for other peoples efforts, the administration is creating a perfect storm for itself come 2016.

    P-noy clearly knows as much about macroeconomics as he does about hard work and leadership.

    1. Right.

      I differ slightly on President Aquino on the grounds that, unlike most, if not indeed almost all, of his predecessors, he has done very little actual harm.

      This alone puts him amongst the top two or three Presidents of the Philippine Republic.

      (The moral of Presidential elections in the Philippines is “Beware of what you wish for!”)

      Subject to that proviso, I agree entirely.

  2. Paraphrasing the late Ronald Reagan:

    The Philippine “government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

  3. With such gdp growth combined with a pledge to target tax evaders and improve tax collection, then tax revenues should be going through the roof.
    They are not.
    More blah blah to cover incompetence and inefficiencies, and a factual pointer to the increase in corruption, which any importer knows is more rampant than ever, especially at manila.
    Bureau of customs is a thieves den. Is anyone in charge. Does anyone care.

    1. There are two very good reasons for not locating a business in the Philippines. One is the 60:40 rule and the other is the Bureau of Customs, who will blackmail you and rob you blind – Heaven help you if you need to import a key component or spare part…

  4. Inspite of the remittances contributed by the OFW’s, I never heard any single word of appreciation on his SONA last year. Sick president.

  5. One thing for sure – only a corrupt government would stop a freedom of information bill, and push instead for increased censorship and media control.

    This more than anything sums up the duplicity and hypocricy of p-noy and his cohorts, more so since foi was a central campaign promise.

    “If a political party does not have its foundation in the
    determination to advance a cause that is right and that is
    moral, then it is not a political party; it is merely a conspiracy
    to seize power.”
    ~Dwight D. Eisenhower

    What everyone can now clearly see with p-noy, the liberal party and team p-noy is –
    Words without conviction
    Actions which highlight hypocricy
    Protection of the elite and status quo
    Lack of political gravitas
    Administrative incompetence in many depts.
    Knee jerk policies and reactions
    Lies and propaganda not communication
    Closed bidding not transparency
    Arrogance not accountability
    Secrecy of information and control of institutions
    Villification of critics
    Vindictiveness bordering on psychopathic
    Hatred of debate and free speech
    Self interest first and foremost
    Ongoing human rights abuses
    Corruption at all levels
    Kowtow to US as required

    Let us hope voters are not conned again in 2013 elections. Enough lies.

  6. “If we cannot agree on a standard definition of what an inch is, then how are we to know whose penis is really bigger?”

    Why settle for the imperial “inch” if we can use the SI-based “centimeter”? FYI, the Metric system is simpler to use – coversion is easier. Compared to English system, it’s more scientific, and more efficient. Enjoy. 😉

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