MANILA, March 12, 2013- The Philippine stock exchange has been cited as the third best performing market in 2012 according to the Paris-based, Word Federation of Exchanges. The country’s economic comeback has shed it at last of its image as the “sick man of Asia,” and is now making even the most skeptical heads turn. This is a major development, which prompted World Bank country director Motoo Konishi to regard the island-nation as a “rising tiger.” There are four key points that have contributed to the improvement in the country’s economy. Motoo Konishi cited them as:
1. Macroeconomic stability;
2. A sound fiscal situation;
3. Improved transparency; and
4. The government’s anti-corruption drive.
Among the four factors cited, bureaucratic transparency and the anti-corruption drive were the major points emphasized by the country’s administration back in the 2010 presidential elections. During the campaign, the other candidates stressed the importance of economic improvement measures, something that was already on the verge of happening during that period.
However, the main campaign point of then presidential candidate Benigno Aquino Jr. was to eliminate the pervasive culture of corruption throughout the government. Hinging his entire campaign on stopping corruption back then seemed at the time like a trivial issue when compared to the economic reforms that were being promised by the other candidates. But voters responded to his platform. They seemed to fully grasp the nature of the real problem.
Corruption gradually became the norm within the Philippine government, a condition that needs to be eradicated or at the very least minimized. It is naïve to think that corruption will be totally eliminated, and it probably is. Nevertheless, the important thing today is to dispel the notion that bribing government officials is a requirement as an inducement for them to perform their jobs.
The active effort of the current administration to be transparent as well as its anti-corruption drive slowly helped win back the citizen’s trust in their government. When the people trust their government to perform its critical functions, good things are bound to happen.
Corruption in government is a concern for each and every Filipino, whether they admit it or not. Some argue that corruption is a necessary evil because it is deeply embedded in the institutions that govern them, and chasing it away is an exercise in futility. It is almost the cultural norm to factor in the cost of bribing some unscrupulous official just to get the necessary permits to, for example, start up a business.
This culture of corruption may have reached its peak back in 2001 when the deal between the Philippine government and the Philippine International Terminals Corp. (PIATCo), a consortium of Chinese-Filipino firm and Germany’s Fraport AG, was aborted. The contract involved was huge, not due to the cost of construction as one might expect, but due to the costs of government red tape, such as the necessary regulatory approvals.
This incident may have hurt the government’s credibility in the eyes of foreign investors because it served to reinforce the long-held perception that a lengthy list of government officials needed to be bribed first before a project could officially commence.
Fast forward ten years later. The perception of endemic government corruption is slowly being replaced with a greater sense of trust, largely due to an active effort made by the government to be transparent in their policies.
This renewed optimism with regard to government honesty and transparency favors investors both foreign and domestic. Citizens are now looking to start their own small and medium sized businesses. This helps in the local job creation and domestic spending of Philippine citizens.
Remittances have long been regarded as the savior of the Philippine economy because millions of Filipinos are working abroad and sending money back home to their families. With money simultaneously being remitted from abroad and also generated locally, domestic spending increases and revenue will be generated through taxes, foreign exchange and sound fiscal policies.
So what now?
The Philippines (and its urban areas in particular) is becoming a country that’s now a top destination for multinational companies to outsource their business processes. These companies are hiring and training young people to work for them locally, and the impact on the local economy is significant.
Together with big businesses setting up offshore operations in the country, the real estate industry is also experiencing a boom. This follows a logical economic pattern. More buildings being constructed means more materials and workers are required. This leads to a greater demand from other industries as well, such as construction, electronics, food services and insurance (for blue collar workers.)
The more people working and holding jobs, the more they are able to afford luxury items like electronic gadgets, which in return serves to boost the retail industry. Domestic consumption is also rising due to these factors, which in turn allows more people to buy more things. Increased spending means more taxes being paid to the government and, eventually, more revenue for government projectsall of which ultimately leads to national progress.
Government revenue is now safe and secure, largely as a result of the anti-corruption drive. Now these funds are being directed towards more meaningful government projects that help the citizenry.
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