by Atty. Tony(APA) Acyatan (Atty. APA – chairman of Acyatan & Co., CPAs-DFK International is president of PICPA in 1990 and ASEAN Federation of CPAs (1998-2000) and Accountancy Hall-of-Famer (2006).
FORECAST: The Development Bank of Singapore – one of ASEAN’s biggest financial institutions – is predicting a higher growth rate for the Philippines. Instead of the government target of 4.5% for 2010 – DBS says it will reach 6.5%. Excellent enough – but not better than our neighbors. – Singapore will have 15%, Taiwan – 9.5%, Thailand – 9%, and Malaysia – 8%. Vietnam and Indonesia have GDP growths almost the same as ours.
The RP GDP upsurge – which started during the second quarter of 2010 was ushered in by the consumer and retail records generated during the national and local elections. The Private and Public Partnership Program initiated by the new Aquino Administration also brought in positive results with the inflow of more investments from both local and foreign capitalists. The solid foundation of all is provided by the consistent OFW remittances.
BONANZA? As more foreign investments come in – and bigger OFW remittances are received (second semester tuition support and early Christmas gifts), the local currency is expected to further appreciate in value against the mighty US dollar. With this “positive” change, Filipinos can afford to buy imported goods now at “cheaper” prices. Foreign travels will also be more affordable for peso-earners.
But the strong peso ushers negative factors. Filipinos may prefer imported items against locally-produced ones. The peso equivalents of OFW remittances will be proportionally reduced. Exporters will earn the similar amount of dollars from their sales – but these will translate to lower amount of pesos with which to pay for their domestic raw materials and labor. We are happy for the exchange rate improvement – but we are jittery about the economic side effects.
DFI INFLOWS: Our country is receiving bigger amounts of direct foreign investments – signifying trust and confidence in the new Administration. US firms operating in the Philippines has in effect “blessed” our local business and industry by their optimism as regards our economy. Despite corruption, tax structure and infrastructure concerns, we have been ranked second to Singapore in the ASEAN Business Outlook Survey 2010.
Let us just hope that these FX investment inflows will not be just “hot money” coming in – which are taking advantage of the positive domestic developments. While big ticket inflows are welcome since the positive effects are immediately felt, the sudden departure of said foreign exchange can create havoc with the first signal of economic deterioration. Foreign investments come and go without any loyalty at all.
SABAH: We had a vacation last weekend in Kota Kinabalu, capital city of North Borneo. In three days – we never saw any beggars (nor traffic aides or policemen on the highways and roads. Although the independent state of Sabah relies mainly on farming, fishery and tourism – unemployment is almost nil. In fact, many of the retail clerks are either Filipino informal immigrants or Malaysian subjects with Filipino family ties (principally from Zamboanga, Basilan, Sulu and Tawi-Tawi).
We were there during the Muslim holidays at the end of the Ramadan so we were unable to observe the real run of business and industry. Our purchases were limited to souvenir items and Sabah tea. Apparel and shoes there are comparatively inferior than what we have. Food is cheap – as in fact our buffet breakfast in the hotel costs only P168.00 while buffer lunch is equivalent to just P210 (Exchange rate is M$1/Ringgit = P14.00).
LESSONS: As human beings, we are like little pencils in the hand of our Lord. We are the instruments in writing His love letters to the world.