Addicted to migration?

By Felipe Salvosa II

It’s a quiet morning at the local arcade. The beauty parlor has just opened, but people are starting to fill it up. Not all of them are paying clients, though -- some have come to chat about the latest goings-on, probably on their way to the neighborhood courier/money transfer outlet or to the shop where there’s mobile phone “load.” Upstairs, the eatery selling lugaw, palabok, empanadas, budget rice meals, and a variety of viands is also starting to get busy, catering to people on their way to work.

This scene could be somewhere in Metro Manila, but it’s also in Blacktown in Western Sydney, home of the largest Filipino community in Australia. Where European settlers once took over from the aborigines, Filipinos are consolidating their own diaspora, which globally has reached some nine million.

Pinoy take-out at Blacktown City in western Sydney. Numbering 35,000, Pinoys are the biggest minority.

A 'demographic window' of opportunity

By Felipe Salvosa II

Is a large population a boon or a bane?

The debate has been going on for centuries. In the Philippines, it flares up whenever lawmakers take up bills proposing to control population growth.

In recent months, however, the government’s top economic managers -- echoed by a number of private-sector analysts -- have cited the advantages of the country’s demographic profile, changing the tone of the population debate.

In March 2012, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. told the Philippine Investment Forum that the Philippines would be the last major economy in Asia to enter the “demographic sweet spot,” and this would happen by 2015. In May, Finance Secretary Cesar V. Purisima said a huge working population was expected to accelerate economic growth.

The BSP chief pointed to the Philippines’ young population, which, at a median age of 22.2, is even younger than neighboring countries like Malaysia (25), Indonesia (27.8), and Vietnam (28.2).

OFWs fuel urban-rural gap (2007)

By Felipe Salvosa II

Money from overseas workers is fueling the divide between urban and rural areas with remittances tending to benefit the country’s affluent regions, leaving poorer regions behind and worsening inequality, according to a study.

And while overseas Filipino workers’ (OFW) remittances have contributed significantly to the economy’s growth, the study by the University of Santo Tomas (UST) confirmed the worrisome phenomenon of agricultural workers leaving the farms to join industries in more developed regions and wait for the opportunity to become OFWs themselves. 

The study, "Workers’ Remittances and Economic Growth in the Philippines" authored by economist Alvin P. Ang of the UST Social Research Center, found that the more OFWs sent per region, the lower the percentage of workers in the farm sector.

Washington SyCip: Fighting the good fight

By Felipe Salvosa II

AT 90 years old, Washington Z. SyCip, legendary founder of the monolithic audit firm SGV & Co. and one of the pioneers of the Asian Institute of Management, is still up and about.

Mr. SyCip is wearing a new hat as the Philippine government’s private sector adviser for the 45^th Annual Meeting of the Board of Governors of the Asian Development Bank, which opens this week in Manila.

Despite his age (Mr. SyCip has met all Philippine presidents except Emilio Aguinaldo), the accountant and accounting professor who served as a cryptographer in Calcutta during World War 2 has not fallen into the trap of cynicism. Mr. SyCip still believes Asia is the future and the Philippines has bright prospects ahead.

“It’s not the age. It’s how you feel,” Mr. SyCip told BusinessWorld in a Saturday morning interview at the SGV headquarters in Makati.

Photo from Wikipedia

Jeffrey Sachs: Philippines 'very complicated'

By Felipe Salvosa II

There are simply too many babies being born in the Philippines, making it “very hard” for poverty-reduction efforts to make even a dent, according to one of the world’s most influential economists.

Fertility rates are “too high” and something should be done to bring down the number of babies born per household to an average of two instead of the current three to promote economic growth and achieve “social inclusion,” said Jeffrey D. Sachs, director of the Earth Institute at Columbia University.

Photo from Wikipedia

Nouriel Roubini: Philippines ‘an economic success’

By Felipe Salvosa II

Economist Nouriel Roubini, who foresaw the US recession that stemmed from a busted housing market, yesterday turned cheerleader for the Philippines, heaping praises on the country’s fiscal and monetary policies and declaring the erstwhile sick man of Asia “an economic success.”
 
Mr. Roubini, in Manila for the Philippine Investment Summit 2013, said the country was ready to be fully integrated into the regional economy under the planned ASEAN Economic Community.
 
“The economic fundamentals of the country have vastly improved. And you see the results in terms of overall growth, low inflation, low fiscal deficits, low stock of public debt, positive external balance, low external debt, the performance of equity markets and bond markets and of the currency,” he told an exclusive press roundtable.
 
“It’s already reflected markedly in the economic success of the country and therefore this country is competitive. It’s flexible, it has a diversified economy, can compete in a wide variety of sectors. [I]ntegration and opening, the furthering of it, can only be beneficial to the country over time.”

Photo from First Metro

Sovereign credit ratings

By Felipe Salvosa II

The Philippines has finally reached “investment grade” status. The recent decisions by Fitch Ratings, Standard & Poor’s (S&P), and Moody’s to upgrade the country’s sovereign credit rating grabbed news headlines. What does this mean for the government, the economy, and business? More importantly, what is in store for the ordinary Filipino struggling to make a living?

In a nutshell, credit ratings represent assessments by credit rating agencies (CRAs) on the risk that a borrower (in our case, a sovereign nation, the Republic of the Philippines) would default on its debts. Governments and firms need to get a credit rating to raise funds from bonds, and ratings influence borrowing costs. 

Table from the Reuters blog

Financial regulators also look at credit ratings to enforce capital standards. Investors, meanwhile, depend on credit ratings to determine which financial instruments are safe bets. For instance, big US pension funds invest only in investment-grade securities to protect their retirees.

Full article at the PIDS website.

The ASEAN Economic Community

By Felipe Salvosa II

In two years, the Association of Southeast Asian Nations (ASEAN) will reach a milestone—perhaps the most significant since the establishment of ASEAN itself nearly half a century ago. The 10-member regional group will become an “ASEAN Community” by 2015, standing on three pillars: the ASEAN Political and Security Community, the ASEAN Economic Community or AEC, and the ASEAN Socio-Cultural Community.

As it is, ASEAN is already an economic powerhouse, with a combined economic output of $2.2 trillion and a population in excess of 600 million people. Together with neighbors China, Japan, and South Korea, regional trade accounts for a quarter of world trade.

AEC will be the culmination of years of efforts to integrate the regional economy. The goal is to transform ASEAN into a single market and production base. ASEAN is envisioned as a regional economy with efficient production networks and high quality cross-border services such as air travel and healthcare run by a mobile and skilled workforce. Under the AEC vision, goods, investments, and capital flow freely, but growth is inclusive, with small and medium enterprises thriving despite competition.

Full article at the PIDS website.