Of course, we should be happy for small mercies. At least, we got $50 million from Ford Motors, at the expense of homegrown Francisco Motors at that. I just hope they don’t make a big thing of it as one of the fruits of Ate Glo’s close relationship with Dubya. I can almost expect speeches praising the Ford investment as a vindication of the investment climate under Ate Glo’s watch. That, I say, confirms our desperation.
And we should be desperate. The truth of the matter is, as AIM’s Bobby De Ocampo pointed out, total approved Foreign Direct Investments (FDI) as of the second quarter this year is a paltry P7.1 billion or about $130 million, a fraction of just one investment in Thailand, Ford’s. That’s also at least a billion pesos lower than the reported take of Multitel, one of the pyramid scams that victimized a lot of people.
And you can’t just blame Mar Roxas for the horrible statistics. This terrible state of affairs is a cooperative venture of the Arroyo Cabinet. It is the result of the failures in the peace and order arena, an educational system in crisis and the chronic lack of funds for things we must do to get out of our rut. Yet, there is money for lavish foreign excursions and pork barrel projects. Why would an investor want to bet his resources on a country that is obviously unable to manage its affairs?
The ratio of outstanding government debt to GDP, Bobby de Ocampo pointed out, is now at 70 percent and rising. The World Bank, de Ocampo said, has established the acceptable ratio at 25 percent for an emerging economy like ours. It is obvious that we are way off and would soon hit our limits. The only reason rating agencies and international banks have not totally blacklisted us are pockets of redeeming developments here and there, like maybe, our OFWs.
Bobby, a former Finance Secretary, was clearly worried about the state of government debts. He shared with us two charts, one that compared us with five other countries and another that showed the deterioration in the government’s fiscal position. (Charts 1 and 2 shown here under).
Mr. De Ocampo also surmised that government would most likely have to borrow more from domestic sources next year as we hit our limits on foreign borrowings. That means increased pressure on interest rates that could suppress any hint of a private sector-led recovery. That would also put pressure on the exchange rate as the Treasury converts borrowed pesos to dollars to service maturing foreign debts.
On more gut issues, Bobby showed us a chart that compares our unemployment rate (Chart 3 below) with our neighbors in the region. It is a dramatic representation of how bad our situation is. Look at it and weep.
Finally, he showed a chart (Chart 4 on Page 5) that compares GDP per capita growth and poverty alleviation, also among our neighbors. That too, looks pretty discouraging, even if responsibility for it must be shared by recent past presidents. No wonder the percentage of our population who say they are poor has dramatically risen, as reported by the Social Weather Station.
I am not that sure our leaders and even some of our people (notably the noisy left) are aware of the important relationship between foreign investments and job creation. We just don’t have enough capacity to raise the huge capital resources to set up large scale job creating industries that are globally competitive. This is why a favorable investment climate is essential.
As if we were not doing enough to discourage investors, the Fraport scandal have been elevated to the World Bank for arbitration. In so doing, Fraport made Philippine corruption a world class scandal. It will definitely further cool the receptiveness of foreign investors for a long while.
It does not matter that Fraport is probably as culpable in this sordid mess. Fraport, after all, condoned and most likely financed the "representation expenses" of that mysterious lobbyist Liongson. Shortly thereafter, the Estrada administration amended the contract allowing those onerous provisions. But the black eye is on the country, any way you look at it. If we were a normal country with even a moderate sense of decency, this scandal should be enough to bring down the administration. But this is the Philippines.
This is why I say, this country needs a fresh start. Unfortunately, our politicians, their cronies (like that powerful law firm) and the system they thrive in, are not likely to give us that slack. In the meantime, everyone is on a wait-and-see stance. We will continue to lose investor interest and, with it, the jobs our huge army of unemployed desperately need.
I looked at some of my old files and managed to fish out some figures that should be interesting to any investigating committee. GSIS has 1.5 million members and SSS has 24 million members. The annual operating expense of GSIS is in the vicinity of P4.2 billion or about P3,000 per member. SSS spends P4.6 billion a year for its operations for a cost of P200 a member.
Why the scandalous disparity? GSIS has general insurance operations but that does not demand a high overhead. In terms of efficiency, SSS seems more efficient. So, why the difference?
"I’ve taken so many cold showers to fight temptation," the priest told his superior, "that now every time it rains, I get an erection."
Boo Chanco’s e-mail address is bchanco@bayantel.com.ph