The peso has risen to its strongest in a long time, breaking into the 40 to $1 level this week. Meanwhile, the economy grew 7.1 percent in the third quarter, the fastest in Southeast Asia. Business confidence remains high, with the country retaining its 87th place in Forbes magazine’s annual list of Best Countries for Business, placing ahead of China and India.
There is no room for complacency, however. Out of 141 countries, 87th place is still not much to crow about, especially because there was no improvement in the rating, and also because the Philippines still lagged behind several of its Southeast Asian neighbors. Singapore placed fourth, Malaysia was at 31st, Thailand 67th and Indonesia 76th. The rankings track levels of foreign direct investments in the region, with the Philippines trailing its Southeast Asian neighbors.
Administration officials credited the economic growth ‑ notable particularly amid the global downtrend ‑ to the “economics of good governance.” But Socioeconomic Planning Secretary Arsenio Balisacan also admitted that the positive figures have yet to translate into inclusive growth. The benefits of growth are still not trickling down to the grassroots. He said that for the average Filipino’s income to double, economic growth must be sustained at the same level for the next 15 years. High business confidence in the Aquino administration is also not translating into investments that will generate enough decent jobs.
Some clues to creating those jobs may be gleaned from the Forbes list, wherein the country’s ranking slipped in five out of 11 factors: trade freedom, red tape, corruption, personal freedom and tax burden. It improved in terms of market performance, innovation, monetary freedom and investor protection. The rankings did not change for property rights and technology.
Positive economic performance and high business confidence indicate that the government is on the right track. The administration is making the right noises about promoting transparency, reducing red tape and leveling the playing field.
The challenge is to send a convincing message that the reforms that have been undertaken will be sustained. After many years of business policy reversals, uncertainty in enforcing contracts and weakness in the regulatory environment, investors are holding back longer and waiting for solid indicators that this time, business-friendly policies will be in place for the long term.