It will be a very hectic year on the economic front for the Philippines this 2015. Hopefully the focus will be on opportunities. Of course, like in the past, they’d be mixed with challenges. And some of them, having been manifest for some time, would be a shame to lose. Let us cite a few:
In infrastructure, prospects remain promising for the Aquino administration’s flagship public-private partnership (PPP) program. This, despite the fact that after more than two-thirds into President Aquino’s term, the PPP’s record has not been impressive with only eight of more than 50 infrastructure projects awarded.
The government has promised to do more this year and the next. The private sector is excited about the big-ticket items set for rollout this year. These include the P123-billion Laguna Lakeshore Expressway Dike, which has drawn interest from the country’s biggest business groups, including first-time PPP investors such as tycoons George Ty and Andrew Tan.
At the Department of Transportation and Communications, everybody is looking to do the next airport PPP deal. The contract bundles major provincial airport projects, valued at P116 billion, for turnover to the private sector of the maintenance and operations of the airports in Bacolod-Silay, Davao, Iloilo, Laguindingan, New Bohol (Panglao) and Puerto Princesa—all gateways to major tourism and business destinations across the country.
Given the right push, the PPP program is seen as a vital factor in sustaining the country’s economic growth rate.
In November, the country is hosting this year’s Apec (Asia-Pacific Economic Cooperation) leaders’ summit—nearly two decades since it played host to this regional conference in 1996. The Philippine economy has come a long way since, and the administration hopes to display its “remarkable turnaround” in recent years as the country holds the various Apec meetings months leading to the summit. Said to be the country’s biggest event of the year, the gathering could indeed be a window of opportunity for the Aquino administration to showcase its achievements.
And then, there is the integration of the economies of the Association of Southeast Asian Nations (Asean). Established in 1967 in Bangkok by the five founding members (Indonesia, Malaysia, Philippines, Singapore and Thailand), the regional grouping aims to create a single market and production base where there is free flow of goods, services, investment, capital and labor. Under the Asean integration plan, tariffs on most goods from member-countries will be lowered to zero or near-zero, financial systems will have the same standards, and employment restrictions will be eased so that Southeast Asians will be free to find jobs in any country within the region. Whether all Philippine industries are prepared for the integration is more of a challenge than a question that government must address.
There, too, is the expected power shortage in summer. The government is still soliciting private sector participation in the effort to augment power supply starting March this year, although recent indications are that the shortage would not be as severe as initially expected.
True, the economy is expected to benefit this year from falling crude oil prices, particularly in terms of lower power and transportation costs. Some analysts, though, warn about a possible adverse impact in the longer term. They say the low prices could trigger layoffs in oil-producing countries where many Filipinos are based; this could have an adverse impact on the local property sector where overseas Filipino workers have become a major market and which has been enjoying a boom for the past many years.
Also, the economies of the country’s major trading partners remain fragile, particularly those of Japan and the eurozone. There is also the prospect of higher interest rates in the United States that could raise borrowing costs and lead to a capital flight from emerging markets to dollar-denominated investments. The biggest external risk remains the political tensions in various parts of the globe, from Russia to the Middle East to East Asia.
As for extreme weather disturbances which seem to relish the Philippines as a favorite destination, they too are inescapable realities that the country must keep on working to “handle.”
It could be a rough ride this 2015 for the Philippine economy, but as things stand, the country seems prepared to cope with any external shock. And there is a consensus that the Philippine economy will remain one of the region’s best performers this year. Let’s get serious and prove that consensus right.