I very recently had the pleasure of spending a morning with Dr Bernie Villegas. What was suppose to be a brief update turned out to be more that two hours hearing about his view of the "very promising" prospects for the Philippine Economy. Known in the business community as the "Prophet of Boom", Dr Bernie was a bit more introspective and somewhat "conservative" than his usual hyper-optimism.
|Fast Growing Economy|
Nevertheless, my confidence in the future of our country was boosted a gazillion times after that chat with Dr Bernie. In my hopes to spread the optimism, I am sharing some of the key points I remember from the talk.
Let's all try to live long, quality lives. We'll be rich soon!
The Philippines will be the 16th Largest Economy by 2050!
The Prophet of Boom started out by citing the very exciting prediction of the top economists of HSBC that the Philippines is poised to be the 16th largest economy in the world by year 2050! That means that when my kids hit my present age, they'd actually be enjoying the perks of being a rich 1st world country! That's assuming the present economic and political fundamentals hold up and are sustained. That's a 5% to 7% growth rate consistently for the next 20 to 30 years. Very doable.
It's like what happened to Korea, Taiwan and Singapore. Korea grew to be the economic super power by the mid 80's even after having been torn to bits by the Korean War only 30 years prior. The tiny island state of Taiwan which still isn't even officially recognized by many nations rose to its place in the World Economy despite only being a "breakaway" state from Mainland China a few decades before.
Singapore, Hong Kong, Taiwan and Korea all eradicated poverty in just one generation. This is despite being very poor in natural resources, not having a domestic market as large as the Philippines and some having gone through war.
Meanwhile, a lot of good things are looking up for the Philippines:
After many years of finding our balance, our Democracy is now on firm footing. The 2010 elections was a turning point in our history where clean and generally peaceful elections took place thanks in part to the PICOS machines and a maturing electorate.
The 2010 elections gave us a glimpse of how clean elections can be achieved. We all need to do our part in protecting this new-found source of true democracy.
We just need to "make tiis" watching and seeing more of Kris Aquino and Boy Abunda on TV. Ika nga nila, "what are we in powder for?" Joke lang.
It's been a long time coming but we finally have a more cooperative and peaceful labor sector. The era of massive strikes, plant shut downs and even urban terrorism against the management sector are now, for the most part, lessons in our history. We are seeing a more progressive, responsible and cooperative labor sector willing to partner with management to add jobs to the economy.
|Militant Labor has quieted down.|
|New Face of Philippine Labor: |
Peaceful and Cooperative!
Educated Young, English Speaking White Collar Labor Force:
Despite the unrelenting efforts of programs like Willing Willie, Vice Ganda and similar shows that seems to be a consipiracy to "idiotize" the Philippine population, the foundations of the Philippine Education system, poor funding notwithstanding, has continued to churn out a well educated mass population. More than 50% of the population is below 25 years old, knows math, a little bit of science and enough structured English. Moreover, parents in the Philippines still labor hard both here and especially abroad to send their kids to some form of schooling with most being able to complete at least high school where they learn critical thinking, life skills and English.
The Business Process Outsourcing Industry:
The educated labor force is fueling the astronomical growth of the Philippine BPO industry. We have already outpaced India, Ireland and all other challengers to the BPO market. This is giving rise to more affluent and young middle class which is also feeding the growth of real estate (condos and mid priced housing), retail and liesure. It really is starting to be MORE FUN IN THE PHILIPPINES.
This phenomenon has continued unabatted and even accelerated over the past 20 years and counting. At any given time, around 8 to 10 million pinoys are abroad mostly either as contract workers or immigrants who all send back money to the mother land. This is fueling the housing boom, the retail boom and the micro enterprise boom. Many pinoys left here in the Philippines go into business to augment their income. The Go Negosyo movement may also be inspiring the legions of OFW family members here at home.
It's also somewhat fueling the education boom as more and more kids of the OFW's are able to progress into college. And, as they graduate, many ambition to work abroad and take over as their parents come home to retire.
The OFW families has also created a spike in the savings rate of the average Pinoy family. Thus the banking system is awash with CASH!
Strong Financial and Banking System:
Credit this to Cory Aquino's Banking Team. Joey Cuisia and Jess Estanislao used their expertise to set up a very stable and efficient banking system when they took on the reigns after the Marcos era. The reforms they put in place adds to our strength as an emerging "market". Portfolio of loans and assets are very healthy and our systems well managed. This is what sets us apart from many economies in Asia and the rest of the world.
Low Dependence on Petrol and Exports:
Our economy is less dependent on petrol and exports as other countries are. This has insulted us from the crisis that hit the USA and Europe of the last few years. As such, our economy continues to grow and our dollar reserves expanding despite the turbulance in other parts of the world. And, despite the economic slow down in these markets, the Europeans and those from the Middle East are too highly dependent on the Filipino labor force to do tasks they have become accustomed having Pinoys do.
One of the Best Performing Stock Markets in the WORLD:
Have you guys seen the index lately? It's up more than 25% since the start of the year! We have consistently been in the top performance list in the past few years. This will bring in even more investments into the country. And a lot of instant millionaires.
Dr Bernie recounted the contributions of each of the recent past Presidents in setting up the Philippines for greatness:
Ferdinand Marcos: Well balanced source of energy. We can thank Marcos for pushing geothermal and other alternatives to petrol for our energy requirements. Though we are presently still among the most expensive electricity cost in the world, this will eventually come down as efficiencies kick in.
Corazon Aqunio: The strong and stable banking system and the restoration of Democracy. She fought off all those coup d' etat attempts that practically squandered the goodwill generated by the People Power revolution. She prevented our country from falling into the control of a military junta like what was seen in Latin America during that era.
Fidel Ramos: De-regulation, Liberalization and De-nationalization of key industries to drive efficiency and development of key industries and infrastructures. The telco industry is one of the biggest beneficiaries of this move. Singapore Premier Lee Kwan Yu commented during his visit here in the mid 90's that "98% of the Filipinos had no phone and the balance 2% were waiting for a dial tone". This embarassingly true observation inspired a more aggressive de-regulation of key industries. The BPO industry is benefiting from the de-regulation of telco and BPO is one of our main engines for growth in the next few decades.
Joseph Estrada: Modernization of the Agriculture Sector care off the appointment of Ed Angara as Secretary of Agriculture. In their short tenure, Erap and Ed layed down the roadmap for building farm to market roads, post harvest facilities, irrigation and rural development. All this helped spread the wealth as well as grew the contribution of our agri sector in moving the economy forward.
|Erap gave priority to Agricultural Development|
Gloria Macapagal Arroyo: Gloria helped continue build a massive infrastructure that is yielding many benefits to the country. The nautical highway, SLEX, SCTEX, NLEX and many other projects in the country-side has aided in generating commerce and trade even to far flung areas in the country.
What could derail our good fortune?
Corruption remains to be our biggest challenge. This is probably why President Noynoy is focused on establishing a clean government.
Red Tape is also a damper on our progress. It takes too much effort to invest and get business done in the Philippines. It also provides many opportunities for the corrupt. If we can streamline our processes and not have to go through too many steps to get permits, licenses and approvals, our business activities will grow exponentially.
Vulnerable to Natural Calamities. We sit right smack in the usual path of storms and depressions. This is a challenge we need to get used to or should always be prepared for.
High Rate of Poverty. We need to drive growth in the economy consistently at 6% to 7% to eventually eradicate the poverty that eats up our country. Other countries have done it in the past. We are poised to make it happen.
Dr Bernie is expecting the country's credit rating to be improved to investment grade by or before Christmas. If this happens, then maybe his other forecasts will finally prove right!
|The Prophet of Boom,|
Dr. Bernardo Villegas
I am keeping my fingers and toes crossed!
Mabuhay ang Pilipinas!
Triathlon will certainly help in jumpstarting the boom. Mahal ng bike, eh.