Business better under BBM

Notable in two years of the presidency of Ferdinand Marcos Jr. has been the overall buoyancy of business and the robustness of the economy.

And if governance is all about the economy, then I say the first two years of President Bongbong Marcos have been a stunning success story.

It helped that the Philippine economy became the fastest growing economy in the ten-nation ASEAN, a projected growth of 5.8 to 6.3 percent for 2024.

This is after coming from the worst recession in 100 years when the economy contracted by 9.5 percent in 2020 whose impact, says Economic Planning Secretary Arsenio Balisacan, was exacerbated by setbacks like “tighter fiscal space in the form of a higher national debt and fiscal deficit, as well as social and economic scarring in terms of learning losses, business closures and record levels of unemployment.” What Arsi means is that the till was nil when BBM took over on June 30, 2022.

“We are expected to continue outpacing the growth of Asia’s economic powerhouses in the years to come,” says Finance Secretary Ralph Recto. And by 2075, 50 years from today, the Philippines will be richer than France in terms of the size of the economy.

Why is the economy strong? Simple answer: Thanks to the private sector.

The private sector is the main engine of economic growth. About P86 of every P100 of GDP is because of the private sector. Government consumption as a percent of GDP is only 14.2 percent.

Why is the private sector strong? It’s a combination of the economy’s natural attributes and – government policies.

With a population of 115 million, the Philippines is the 12th largest consumer market on earth. In terms of what the dollar can buy in local goods (what you call purchasing power parity or PPP), the economy is already worth $1.27 trillion. Per capita, Filipinos make $3,859 in nominal GDP, and $11,000 in GDP PPP.

The country is the world’s second largest archipelago, 7,600 islands. It has the fourth longest coastline in the world. It is No. 2 in biodiversity. You can find more species of animals and plants in this country than any other country, except one. We have more gold and minerals than 200 other countries.

Now, for government policies. Of all administrations since 1935, the BBM administration has been the most open for business. The country has kept its investment-grade creditor ratings, with a stable outlook, a prerequisite to doing good business. “The current policy landscape for investments has never been more open and liberalized,” says Ralph Recto.

President Marcos Jr. has been the primary marketer of the Philippines as an investment destination. In 24 trips to 17 countries, BBM attracted $61 billion in investment pledges, an amount, if materialized, could pay for half of Philippine foreign debts.

The most dramatic of the government’s business liberalization acts is the full implementation of the Public Service Act which took effect April 2023. PSA 2023 allows 100 percent foreign ownership of airports, railways, expressways, shipping, telecommunications and energy. Since 1935, the Constitution had limited these areas to not more than 40 percent foreign equity. “The result is that Vietnam, Thailand, Indonesia and Malaysia now have stricter foreign ownership restrictions in more sectors than the Philippines,” says the think tank IBON Foundation.

The liberalization has meant the share of foreign direct investments as a percentage of GDP grew four-fold, from 7.4 percent in 1987 to 28 percent today.

BBM has uncorked the largest infra spending ever by any government before his – P9.5 trillion to be spent for 185 big-ticket projects – 134 in physical connectivity (mostly roads and bridges) worth P8.3 trillion, 29 water projects worth P714 billion, nine in agriculture worth P213.6 billion, five in health worth P91.9 billion, three in digital connectivity worth P164.8 billion, three in other infra worth P28.2 billion and one each in power and energy, P10.1 billion, and education, P30.6 billion.

Many of these projects will be completed in partnership with the private sector.

BBM signed Republic Act 11966, the Public-Private Partnership (PPP) Code of the Philippines. Services usually rendered by the government will be provided by the private sector – roads, airports, bridges, hospitals, schools, prisons, railways and water and sanitation projects.

The fastest to be decided by government and the largest ever PPP project is the P1-trillion 25-year modernization of the Ninoy Aquino International Airport by giant San Miguel Corp. to build an airport to handle 62 million arrivals a year, double current capacity.

During the BBM presidency, all our local conglomerates are undertaking unprecedented expansion.

Ayala Corp., the oldest Philippine conglomerate, is increasing is capital expenditures 14 percent to P284 billion this year from last year’s record P249 billion. Capex is what a company spends for equipment, machinery, software, roads and buildings.

The most valuable conglomerate, SM Investments Corp., has increased its capex 40 percent to P115 billion from P80 billion in 2023.

The Aboitiz Group is doubling its capex to P153 billion this year, of which 48 percent, or P73 billion, is allotted to Aboitiz Power Corp. (AboitizPower)’s RE projects.

In 2023, Manny Villar’s Vista Land quadrupled its capex to P40 billion and will spend another P30 billion this year.

JG Summit’s Cebu Pacific has placed the Philippines’ biggest aircraft order in history – 152 single-aisle Airbus jets with a list price of $24 billion.

The biggest indicator of how our conglomerates is doing is the huge increase in wealth of their owners. In 2023 alone, according to Forbes, the 50 richest Filipinos increased their wealth by 11 percent to $80 billion.

The 11 percent is exactly double the Philippine GDP growth of 5.5 percent in 2023.

So there, the Philippines is back in business.

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