Let the Constitution do the trick

Point of Law

By Francis Lim
Philippine Daily Inquirer

The current administration’s integrity-based leadership and sound fiscal management are putting our country back on the global map of business.

This year, for the first time, the Philippines was given “investment grade” status by major credit agencies such as Fitch Ratings, Moody’s Investors Service and Standard Poor’s. Indeed, these upgrades are institutional affirmation of our country’s resurgent economy in the face of uncertainties in the global arena.

But, my question is: How do we ensure sustainability of this economic success such that the masses will truly benefit from it? How do we turn this economic growth into inclusive growth?

As a student of economics, I feel that progress has not trickled down to the masses because it is not enough. Having a resurgent economy is insufficient, we need to sustain the growth. Unless investor confidence is translated to tangible investments in the form of foreign direct investments (FDIs), such will not be felt by the broader segment of our population. More FDIs mean more jobs due to capital infusion. Also, FDIs will assist on effective transfer of knowledge and technology.

Insignificant

Despite the average gross domestic product growth of around 6 percent since 2010, our FDIs have remained insignificant. Based on the 2013 UNCTAD World Investment Report, the Philippines lags behind its Asean counterparts in terms of FDIs. We recorded only $2.79 billion FDIs in 2012, which is way behind Singapore’s $57 billion, Indonesia’s $19.8 billion, Malaysia’s $10 billion, Thailand’s $8.6 billion and Vietnam’s $8.3 billion.

Also, Myanmar and Cambodia nearly equaled the Philippines’ FDIs with $2.24 billion and $1.55 billion, respectively. The prospect for this year remains bleak. According to the Bangko Sentral ng Pilipinas, the FDIs in the first quarter of 2013 is 2.8 percent lower compared to that of the first four months last year.

As a result, the country’s unemployment rate of 7 percent in 2011 was more than double the regional average of 3.2 percent, and higher than that of Indonesia (6.6 percent), Myanmar (4.0 percent), Malaysia (3.1 percent), Singapore (2.7 percent), Brunei (2.6 percent), Vietnam (2.0 percent), Cambodia (1.7 percent), Laos (1.4 percent) and Thailand (0.7 percent). This further demonstrates the exclusionary character of the country’s growth.

Let the Constitution do the trick