Sick Man of Asia get's better

Interesting article in Bloomberg by old Asia hand Bill Pesak.

Is the Philippines on the way to recovery?

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S&P’s Reward Awaits One-Time Sick Man of Asia: William Pesek


It is often a fool’s errand to predict turning points in the more erratic Asian economies. Nowhere is that truer than the Philippines, whose greatest consistency seems to be disappointing the optimists.

With Europe sliding, America limping, Japan shrinking and the once-unstoppable China slowing, it’s anyone’s guess where the Philippines might be in three years. At the risk of looking foolish in, say, 2015, I think it will be in a far better financial place than it has been in a decade.

My faith rests on four things that Benigno Aquino has done since assuming the presidency in June 2010. These were moves that mark a keen understanding of what ails Asia’s 12th-biggest economy and flashes of courage that were absent in his three predecessors.

First, a nuanced focus on the economy. Gloria Arroyo seemed infatuated with raising gross domestic product during her tenure from 2001 to 2010. It was just talk. Arroyo, like Joseph Estrada (1998-2001) before her, was all about the cult of GDP that beguiles many Asian leaders. This obsession masks big cracks in economies with headline-grabbing growth rates that serve mainly to deflect political opposition.

One in four Filipinos (PGDYTY) lives on less than $1.25 a day. The Occupy Wall Street movement harps on the 1 percent. In the Philippines, it’s more like the 0.01 percent of politically connected citizens who reap the spoils of growth.
Moving Swiftly

Aquino wants to tighten mining rules, cut tax breaks and review contracts to make sure average Filipinos benefit from natural resources and limit the industry’s impact on the environment. He is upgrading infrastructure to attract foreign investment that would create jobs.

The president moved swiftly to get a handle on the long- term budget deficit. That’s a vital step to reducing the waste and graft at the root of the nation’s dysfunction, but also winning the investment-grade credit rating that would accelerate the process.

Second, attacking corruption. Aquino, 52, is both the right guy and the wrong one to fight this battle. His mother was former President Corazon Aquino (1986-1992), who made up with integrity what she lacked in governing skills. She was the moral compass after two decades under dictator Ferdinand Marcos. The problem is that the Aquinos are among the major land-owning families that benefit from the extreme concentration of wealth.
Marcos’s Billions

Benigno Aquino has had no qualms in going after the billions that watchdog groups say Marcos looted. Marcos is the man Aquino’s opposition-leader father was trying to unseat when he was assassinated in 1983. The Marcos family has been staging a political comeback in recent years. Marcos’s wife, Imelda, she of the infamously large shoe collection, now sits in the House of Representatives.

The president is holding Arroyo, her husband and her son to account for alleged corruption. Aquino also is working to oust Supreme Court Chief Justice Renato Corona, a last-minute Arroyo appointee, who faces accusations that include favoring Arroyo in court decisions. While some in Manila smell an Aquino-versus- Arroyo family feud, I sense a bold effort to clean up the nation’s tainted judiciary.

Third, addressing overpopulation. The nation’s ranks are outgrowing the number of good-paying jobs being created, forcing more and more Filipinos to work overseas. Any talk of family planning is suppressed by the powerful Catholic Church, which is too politically active for comfort. Aquino risked the Vatican’s wrath with a “responsible parenthood” bill. Let’s hope more such steps are on the way.
Exporting People

The remittances that expatriate Filipinos send home boosts growth in the short run. But the money does little to build a foundation for organic growth and is a dangerous addiction that must be kicked. Gaining control of the birthrate is a key part of the solution.

Fourth, a gutsy stance toward China. In Asia, it is striking to hear what politicians say publicly about China’s growing dominance and what they really think. No one wants to anger Asia’s nascent military superpower or offend the biggest customer for their exports. Aquino is risking just that as he demands fairness in China’s claims to disputed islands in the South China Sea and cozies up to the U.S.

The Philippines is among a handful of nations claiming the resource-rich Spratly Islands, along with Malaysia, Vietnam, Brunei and China. Aquino refuses to bow to China’s demands, something that has enraged Beijing and prompted calls to punish the Philippines economically.
Balancing Act

China’s rise poses a dilemma for Asian leaders. Aquino is showing Asia there’s scope for approaching China as a peer, rather than a subordinate.

Of course, the Philippines (PHLFUDRT) has demonstrated a unique ability to scuttle the most virtuous of cycles. All too often, its eccentricities pop up to remind investors why it’s often called the “Sick Man of Asia.” This track record is a big reason the Philippines is rated BB by Standard & Poor’s and Ba2 by Moody’s Investors Service. Both ratings are the second- highest for junk bonds.

Credit raters are perhaps too busy downgrading the top 10 economies to reward progress in the smaller ones. Investors who act in anticipation of Philippine upgrades are unlikely to regret it. Sometimes, foolishness has its benefits.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

Overpopulation in Philippines

Japan was already an economic powerhouse before WW2 and became only at par or lower than the Philippines after WW2 precisely because the war exhausted its economic resources. But because they already had the formula or the experience of becoming an economic power, it was imply a matter of ime before they would regain their economic strength. Hence, population was not a significant factor in their economic downfall but it was their entering into a war that caused it. On the other hand, the Philippines was never an economic power and the "fact" that it was the "stongest" economy IMMEDIATELY after the war was simply a function of US support. It was always an "up and coming" economic tiger but never really achieved that status, hence to compare it to Japan after the war is really a false comparison.

Now, if a high population is indeed a factor to higher development, then why did the Philippines - which was a strong economy immediately after the war - not develop exponentially with the increase in population?

Like I said, development is a complex issue and to reduce this into a caricature within the context of the RH bill vis-a-vis the meaning of population as a factor is to oversimplify matters. On the other hand, we know that we have a high population and the higher it becomes, the poorer the greater segment of that population becomes.

For the opponents of the RH bill to gain credibility to their assertion that population planning is not a factor in development and that development does in fact rely on higher populations, then they should first prove a priori that the bigger the population becomes, the richer we become. And that is something that the facts on the ground simply cannot sustain, especially when about 11 million of that population are overseas and probably the largest factor propping up the economy.

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Brothers,

Just to sharpen our minds and continue the mental gymnastics on this topic. May I say :

The jury is still out on this one because there are valid hard data that supports both sides of the issue. There are several top notch papers on the pros and cons. One such study show that even if Japan's land area is similar to the Philippines, their population at 130 million is a lot higher than the Philippines but their per capita GDP is in the high 50,000 Plus USD compared to the Philippines almost 2000 USD . So the greater population is certainly not a handicap in their case. So we can conclude it must be due to several other factors. Remember, after WW2 economic and political conditions in Asia put the Philippines ahead of the whole caboodle. So what happened ? How did we end up dead last? I do not know.

As Brod mentioned, eventually, the law of diminishing returns will apply and you cannot overpopulate the Earth. It can only support so many people but for purposes of analyzing the UP study, we cannot argue a worst case scenario since the paper is merely commenting on "a proposed present day solution, to a present day problem". To apply the worst case scenario argument is like saying "Why try to save the Earth? The sun will eventually go Nova and destroy our solar system".

Having a massive amount of cheap labor helped the buildup of economic power in India and China. After artificially tampering with their Population Growth, China is in trouble because they now have a shortage of Women. "Sabi Da" , many couples aborted when they determined the baby was a girl. Many preferred males only!

IRRI believes the Philippines can be self sufficient in rice provided the Government gives it 100% support like Thailand, India and China. They concluded that there is still a lot of work to do to educate farmers on the Miracle rice. They even have a site trhat can be accessed by text for advise and assistance, Etc. The only factor that is a problem is Climatic Conditions.

And then there is also the study that says, Miracle Rice itself may have caused its own problems. Since they could plant 2 to 3 crops a year the world surplus in rice is keeping price low. Less than 5% of the entire production is actually exported. Maybe the Philippines is better off importing cheap rice and using the land for producing a cash cow crop like mangoes and even aquaculture or (drum roll please.. One of the Brods would love this..) Bananas!!!


Anyway, I am just playing devils advocate. I have no opinion one way or the other but I though I would just lay whatever I think and see where that takes us.

Hope you are not confused as I am already!

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I agree with Brod on this. I do not think the RH bill blames everything on population explosion because the nature of development is complex, but population does play a significant role. If true that higher population is key to development, then the Philippines with almost 100 million people should now be rich. And if true that we have natural resources that can support the population, then why is the VAST majority poor - food poor, land poor, development poor?

Why do we import rice? Even if we totally discounted the corruption in procurement of rice and the series of scams involving food security like fertilizers for crops, it is highly doubtful if the available arable land can feed the population. The Philippines is the 12th most populous nation on earth with a land area that is about 2/3 that of California but with a population 5 times as many. Population then becomes a very substantial issue that is simply brushed off by opponents of the RH bill.

It simply does not compute...

Why Is The Philippines Poor - Dr. A.Martin

THE DIFFERENCE

The difference between the poor countries and the rich ones is not the age of the country:

This can be shown by countries like India & Egypt , that are more than 2000 years old, but are poor.

On the other hand, Canada , Australia & New Zealand , that 150 years ago were inexpressive, today are developed countries, and are rich.

The difference between poor & rich countries does not reside in the available natural resources.

Japan has a limited territory, 80% mountainous, inadequate for agriculture & cattle raising, but it is the second world economy. The country is like an immense floating factory, importing raw materials from the whole world and exporting manufactured products.

Another example is Switzerland, which does not plant cocoa but has the best chocolate in the world. In its little territory they raise animals and plant the soil during 4 months per year. Not enough, they produce dairy products of the best quality! It is a small country that transmits an image of security, order & labor, which made it the world's strongest, safest place.

Executives from rich countries who communicate with their counterparts in poor countries show that there is no significant intellectual difference.

Race or skin color are also not important: immigrants labeled lazy in their countries of origin are the productive power in rich European countries.

What is the difference then? The difference is the attitude of the people, framed along the years by the education & the culture & flawed tradition.

On analyzing the behavior of the people in rich & developed countries, we find that the great majority follow the following principles in their lives:

1. Ethics, as a basic principle.
2. Integrity.
3. Responsibility.
4. Respect to the laws & rules.
5. Respect to the rights of other citizens.
6. Work loving.
7. Strive for savings & investment.
8. Will of super action.
9. Punctuality.
10. and of course...Discipline

In poor countries, only a minority follow these basic principles in their daily life.

The Philippines is not poor because we lack natural resources or because nature was cruel to us. In fact, we are supposedly rich in natural resources.

We are poor because we lack the correct attitude. We lack the will to comply with and teach these functional principles of rich & developed societies.

If you do not forward this message nothing will happen to you. Your pet will not die, you will not be fired, you will not have bad luck for seven years, and also, you will not get sick or go hungry.

But those may happen because of your lack of discipline & laziness,
your love for intrigue and politics, your indifference to saving for the future, your stubborn attitude.

If you love your country, let this message circulate so that many Filipinos could reflect about this, & CHANGE, ACT!