'Economic growth to hit targets this year'

MANILA, Philippines - Economic growth could hit government targets this year, following above-goal performance in 2012, as the Aquino administration on Wednesday vowed to ensure that expansion is sustainable and felt at the grassroots level.

“We are expecting growth of 6 to 7 percent. We expect consumption to continue fueling expansion but at the same time we expect government spending particularly infrastructure and private investment to pick up this year and beyond,” Socioeconomic Planning Secretary Arsenio Balisacan said.

Growth hit 6.6 percent in 2012, surpassing the official 5- to 6-percent target, and making the Philippines Asia’s second best performing economy last year, next only to China. For 2013, the target has been raised to 6 to 7 percent.

The manufacturing sector, which Balisacan said has driven growth since the third quarter of 2012, could also work on the country’s favor. Trade Secretary Gregory Domingo, for his part, pointed to increasing foreign investor sentiment to the country.

“The best is yet to come,” he said, noting that inbound missions had been on the rise since last year and that his department is optimistic it will surpass such “stellar year” in 2013.

On the part of the central bank, Deputy Governor Diwa Guinigundo said prices will remain stable this year, providing “scope” for monetary officials to keep interest rates low to boost economic activity.

Inflation averaged 3.2 percent last year, falling within the low-end of the three- to five-percent target range. It could remain on that range this year, Guinigundo said, as the “relative stability” of the peso also helps on taming consumer prices.

“We are in a good position to face the headwinds of continued external shocks,” he said in a speech delivered at the year-end Philippine economic briefing.

The private sector supported government officials’ optimism, but warned against complacency and urged them as well to fast track much needed infrastructure spending, especially in Mindanao.

Francisco Sandejas, managing partner at Narra Venture Capital, called for the acceleration of roll out of public-private partnership (PPP) projects, some of which have been delayed due to extensive project reviews.

Since its launch in November 2010, only two PPP projects have been awarded, seven others were rolled-out last year, while 17 are in the pipeline for this year, according to government data. In addition, Sandejas also batted for more investments in information technology.

“You are actually doing a good job of talking less, and doing more. But we need to work faster… Patience in the business world only runs so far,” he said.

“The bumped off accomplishments are just the beginning. There is so much work to be done,” he added.

Erramon Aboitiz, president and chief executive officer of Aboitiz Equity Ventures, said the power situation in Mindanao should be addressed by opening up the grid for more competition. “We want to be part of the solution in Mindanao,” he said.

The resource-rich region, Aboitiz said, needs to become “driver of economic growth” if the government wants to sustain its economic success story. Mindanao has been touted recently following the peace deal signed between the government and the rebels.

Budget Secretary Florencio Abad, chairman of target-setting Development Budget and Coordinating Committee, noted the need to “embed” reforms to institutions and policies to make lasting effect to growth.

In the same way, there is a need to make growth more inclusive, by “giving people a stake” to further reforms, especially “the less privileged and marginalized groups of our country.”

“This really means being able to identify key industries and products to support infrastructure projects and deal with those policy bottlenecks… so that we can push businesses and investors that generate growth,” Abad said.