Payback time

It may be President Gloria Macapagal-Arroyo’s sorry lot to be so underappreciated by the Filipino people, but that does not undermine her economic legacy to the nation. Under her watch, we have charted 22 quarters of uninterrupted economic growth - 23, actually, if we factor in third quarter gross domestic product (GDP) growth projected by the National Economic and Development Authority (NEDA) at 5.2-5.8 percent, which is better than the 4.8 percent recorded in the same period last year.

The Philippine growth rate is within the same range as other middle-income countries in the Association of Southeast Asian Nations (Asean), according to the World Bank (WB). Under the Arroyo administration, annual GDP growth has averaged at four percent until 2003. And getting better since.

"Growth prospects are helped by two factors: the ability of the public sector to invest more in infrastructure and service delivery following the major fiscal adjustment of the past two years, and, assuming fiscal adjustment is maintained, the likelihood that private investment will respond positively," Sanjay Dhar, the World Bank’s lead economist for the Philippines, said in a press statement just last week.

Within days, that WB endorsement was bolstered by the glowing assessment of an International Monetary Fund (IMF) mission, which concluded its post-program monitoring on the country last November 17. "Impressive fiscal reforms in an environment of sustained growth and declining inflation have strengthened market confidence in the Philippines," noted the IMF, which raised its growth projection from five percent to 5.5 percent this year due to faster export growth and an improved investment outlook.

To Juan de la Cruz, this means he now lives in a middle-income country, where the per capita income has reached $1,400.

Already, with world oil prices on the downtrend, successive price rollbacks on gasoline, diesel and liquefied petroleum gas (LPG) have eased his daily expenses. According to the Department of Energy’s mild-mannered Secretary, Raphael Lotilla, the average retail price of unleaded gasoline has fallen to P37.24 per liter as of November 14, from a high of P44.24 per liter back in August this year. Meanwhile, diesel prices have averaged at P33.24 per liter as of last week, only slightly higher than the March 2006 level of P32.74 per liter, and considering that it peaked at P37.24 between July and August. An 11-kilogram LPG tank sells at an average of P443 to P508, which is lower than the Jan. 2006 price range of P474 to P524.

By next month, there may be a fare rollback as well. Last week, the Land Transportation Franchising and Regulatory Board (LTFRB) announced that it had received a petition seeking a 50-centavo rollback in jeepney and mini-bus fares. Transport groups are amenable to a fare rollback. The United Transport Coalition (UTC), which is a broadbased group of jeepney operators and drivers nationwide, has indicated that a fare cut would be sustainable even if oil prices increase by 50 centavos next month.

While taxi commuters are unlikely to receive a similar rollback, they are at least spared a P15 fare hike that taxi operators had sought at the height of the oil price crunch. With the downturn in oil prices, taxi operators have withdrawn their bid for the fare hike.

The best is yet to come. With the strong peso comes P22 billion in savings that the government can spend on infrastructure and social services, instead of debt servicing. This has already started, with the administration using proceeds from the expanded Value-Added Tax, 30 percent of which is automatically allocated to such public investments. Under the President’s super-region program, P1.7 trillion will be invested until 2010 to create strategic growth centers in the country through seamless infrastructure.

Ultimately, this means widespread job generation that will improve the lot not only of urban residents, but also of those in rural areas.

Even now, the provincial landscape is fast changing. Call centers are sprouting not only in Luzon, but in Visayas and Mindanao as well. What that says is that young professionals are emerging as the country’s new middle-class. Not only that. Remittances from overseas Filipino workers (OFWs) have been hitting over a billion dollars per month since July, giving credence to expectations that such inflows are being invested in the economy, instead of merely being used to meet household expenses. If bank lending is any indication, noticeable expansion would be in real estate and business services, as well as community, social and personal services.

Just imagine how much more vibrant the rural economies would be with the infrastructure build-up slated to be in full swing by next year.

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If you’ve visited the Batasan Complex lately, you would have seen the first-ever solar-powered Christmas tree put up there by Greenpeace last November 15. It’s part of the organization’s "Pilipinas, Go Renewable" campaign seeking a massive uptake of renewable energy in the country to combat climate change.

Reps. Lorenzo Tañada III (4th District, Quezon) and Nerius Acosta (1st District, Bukidnon) have joined Greenpeace in urging the Senate to prioritize the Renewable Energy (RE) Bill. Both are authors of the RE Bill, which provides government incentives for the development and use of renewable energy sources, including hybrid systems. Under the proposed law, companies engaging in indigenous energy development will be exempted from tariff duties and value-added tax on imported machinery and equipment for the first 10 years of their operating contract; tax credit on their domestic capital equipment and services; special realty tax rates on their equipment and machinery; as well as income tax holiday and exemption for the first six years of their commercial operation.

Unfortunately, reports indicate that the RE Bill has been stricken off the priority legislative agenda, despite the strong push by the DOE for its enactment along with the Biofuels Bill. "Apart from the fact that both the Biofuels Bill and the RE Bill can help minimize our economy’s exposure to price fluctuations of imported fuels, we are also one with all the environmental groups in advocating policies that would protect our environment," Energy Secretary Lotilla has stressed.

Lotilla points out that the Bill would allow the country to increase the share of renewable energy in its primary energy mix from 41.7 percent in 2005 to 42.4 percent by 2010. As of last year, locally-sourced fuel powered 64 percent of our electricity needs because we were able to maximize the use of indigenous and renewable energy capacity.

Let’s not stop the momentum now.

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