Global Economics

Philippines at a 'Tipping Point,' Says President Arroyo


Economic progress under her administration makes the President optimistic that the Pacific nation will ascend to first-world status

The Philippines will be a first-world country within a generation, President Gloria Macapagal-Arroyo told foreign investors during a keynote speech at an investment summit in Hong Kong.

"We are at a tipping point," she said. "And I'm confident that the Philippines will tip forward." For now, she has good reason to be upbeat &mdash 2007 was the best year for the Philippines economy in more than 30 years, with economic growth of 7.3% and the creation of one million new jobs. And landmark deals, such as the $3.5 billion acquisition of Mirant by the Tokyo Electric Power-Marubeni consortium, showed that foreign investors are coming back too.

The foundation for this economic growth, said Arroyo, was provided by the country's substantial reduction in its budget deficit and the continued low inflation. At the same time, the country has boosted revenues by cracking down on tax cheats, reforming tax collection and modernising the banking sector. As a result, the Philippines will balance its budget ahead of the 2010 target.

"Seven years ago, when our administration started, nobody thought we could do it, but we have," said Arroyo. "And there will be no rest. We are continuing the pace of progress that has succeeded in strengthening our economy."

Even the threat of a global economic slowdown is doing little to dent optimism, although Arroyo said she was not oblivious to "clouds on the economic horizon". Sky-rocketing rice prices, combined with the rising cost of energy and other commodities, are threatening to spill over into social unrest and Arroyo said her government would try to soften the blow.

"The economic environment dictates that we provide a buffer, as much as prudently possible, to the poorest who suffer most from rapidly rising prices," she said. "In the meantime we will continue on the path of reform and economic discipline. The near-term pain of reform will provide long-term gain for our nation. It may not be popular but it is, and has been, setting the nation on a new course."

The president said that her remaining two years in office would be dedicated to one main objective: "To invest, invest and invest some more."

That investment will be spent further strengthening the banking and financial system, broadening the tax base and improving tax collections, and cracking down on corruption and reducing red tape.

She said the economy needed to be freed from the shackles of corruption and called on lawmakers to help her push through an anti-corruption law and encourage a tougher approach to wrong-doers, with no exceptions. "We will let the chips fall where they may as investigations are concluded and friend and foe alike are brought to account for their actions," she promised.

Other priorities outlined in the budget, which she signed earlier this month, include investing in what Arroyo termed "the three Es", namely: the economy, education and the environment. She further stressed the importance of continued fiscal discipline and cooperation from lawmakers to get things done.

During the Q&A session after her speech the president fielded questions about how long Filipinos would have to continue relying on overseas labour markets and whether Mindanao would be granted independence if its people voted in favour.

On the subject of overseas Filipino workers, she said that she "would like our people to go abroad because of career opportunities rather than out of necessity", and that even some wealthier nations, such as New Zealand and Portugal, sent a large proportion of their workers abroad. As for an independent Mindanao, she answered: "There has been no demand for that and I don't think we should encourage such demand."


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