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Thursday, January 02, 2003
RP economy to regain in 2003: Neda
By Sun.Star Network Exchange (Sunnex)
PRESIDENT Arroyo's political plans may be for real or not but economic planners and businessmen alike are optimistic that policies for the improvement of the economy would be given more focus this time.
The National Economic Development Authority (Neda) reported that the government is confident that the 2003 gross domestic product (GDP) forecast of 4.2 percent will be met as the private sector is expected to regain its strength.
Romulo Neri, Secretary for Socioeconomic Planning and concurrent Director-General of the National Economic and Development Authority (Neda) made the disclosure during the year-end economic briefing for media by economic managers held recently at the Banko Sentral ang Pilipinas (BSP).
"The resiliency of the private sector particularly in services provide us the confidence that we will meet our growth projections," Neri said.
He said the largest players in the telecommunications sector have announced expansion plans while retail trade giants are also gearing themselves for further competition from foreign retailers.
He noted two important policies that provide manufacturing firms with more leeway for flexibility in coping with the expected oil price adjustments next year.
First, minimum wage increases remain stable given the low inflation in 2002 and in 2003.
Inflation is expected to remain modest in 2003 despite a modest El Nino as the government implements measures to ensure adequate inventories of key commodities and improves the supply chain.
Second, tariff rates for capital goods and other inputs not locally produced have been reduced last week to zero percent.
Tariff of about 40-IT related product lines have also been lifted.
Neri added that government is also well prepared to address the expected occurrence of a mild El Niņo.
To maintain robust economic growth, the newly appointed economic planning chief said the government is set on pursuing structural reforms, which include the continuing modernization of the agriculture sector, the grains reform program, improvement in port services, and liberalization in the airline industry.
"This will support our policy to enable industries to improve their supply chain," Neri noted.
He also cited other policy directions to further improve the performance of the economy.
These directions include: pursuing competitiveness-enhancing trade measures; reducing the fiscal deficit; continuing financial market reforms; investing in education, training, and health; creating high-wage and high skill jobs through human capital investments and technological progress; and promoting a culture of good governance in the public and private sectors.
Neri also reported that the 2002 third quarter real GDP was recorded at 4.2 percent compared to 3.6 percent of the same period last year.
"Philippines is one of the best performing economies in Southeast Asia, second only to Thailand, which reported a 4.9 actual GDP growth for the third quarter," he said.
The Philippines' growth in GDP was fueled mainly by the continued strength of services and recovery of industry.
The robust growth of services was supported by the continued expansion in telecommunications, trade and private services.
Growth in industry, on the other hand, was led by mining and quarrying and construction.
Agriculture slightly contracted due to bad weather but the non-crop sector improved.
In a report by Neda, the government foresees 2002 fourth quarter growth rate in gross domestic product (GDP) at 4.6 percent.
With this, GDP growth is expected to average 4.3 percent in 2002, which is within the initial projection of 4 to 4.5 percent. "The Philippine economy is healthy and gaining strength," Neri said.
But economic indicators in other parts of the country showed a different picture. In Central Visayas investments was down in first nine months of 2002.
In its quarterly regional economic report, the National Economic and Development Authority (Neda) 7 said the investments registered with the Securities and Exchange Commission plunged 33 percent to P1.4 billion from P2.2 billion last year.
Over at the Department of Trade and Industry, the value of the companies that had their business names registered plummeted at a bigger rate of 47 percent to P3.5 billion from P6.7 billion in the same period last year.
On the other hand, the figures at the Board of Investments (BOI) saw some improvement in the third quarter when a Filipino-owned furniture company announced plans to infuse over P50 million for a project in Cebu, the Neda 7 said.
But this was not enough to prevent the BOI from registering a 31.6 percent decline in investments in the first nine months of the year to P284.2 million. Last year's nine-month figure was P415.4 million.
Companies that register with the BOI enjoy incentives like income tax holidays and exemption from duties for certain imports.
Exports did not do too well in the region either.
The Neda 7 said poor third-quarter performance caused total exports from Cebu-based ports to drop 6.6 percent to $2.1 billion in the first nine months of the year from the same period last year.
Combined exports from the Mactan Economic Zones (MEZ) 1 and 2 dropped 15 percent in the third quarter, pulled down by a 49 percent decrease in shipments from MEZ 2. Cebu Port exports also saw a 12 percent drop in the same quarter.
As a result, the total value of exports exiting the region's Cebu-based ports in the quarter fell 13.8 percent to $726.4 million.
Total tourist arrivals for the third quarter also fell 0.5 percent as the number of domestic visitor arrivals dipped 8.6 percent to 120,962, the Neda 7 said.
However, foreign visitor arrivals grew almost 14 percent to 84,156 from 73,863 a year ago despite the travel advisories issued against the Philippines by several countries, including Japan, the United States, Australia, Spain and other European countries.
The advisories were issued after an extremist group operating in the southern Philippines was linked to the mastermind of the Sept. 11, 2001 attacks on the United States.
Total tourism arrivals in the first nine months of the year fell 1.6 percent to 626,510 from the same period last year.
Davao City shared Central Visayas economic outlook.
Local traders claim they are still alive and kicking. They said there might be bright prospects to look forward to next year but with the looming threats of globalization and the country's political skirmishes, businessmen are a little bit frenzied that the local economy which is still on its way to full recovery will again sag.
During the year, Davao Region's economy has its gains and losses. But the local business sector still beams with confidence that it can hurdle another set of challenges by further boosting what was gained and work on what has been the major drawback to the economy.
A preliminary report of the Department of Trade and Industry 11 showed that the region has drawn a total of P4.5 billion investments, surpassing the annual target of only P2.8 billion, in the past nine months of the year.
Davao city topped as the major investment by cornering 60 percent of the total investments which are mostly focused on food and wood industry clusters.
These include investments on banana chips, foam net, corner post, coco desiccating plant, coco oil mill, fishpond, solo papaya and fresh banana.
The region's investment is expected to be boosted by another bulk of P1.3 billion worth of investment projects in the fishery, fruits and vegetables and support industries to be infused by the end of the year, according to the Board of Investments 11.
The region has also grown its revenues from exports by 22 percent during the third quarter as against the same period last year.
The region garnered a total of US$274.9 million export receipts, up by 22 percent over last year's third quarter collection of only US$225.2 million. As of September, DTI 11 said that the region's export earnings already reached US$643.5 million which is 76 percent of this year's annual target.
The region's top exports include agri-based products such as banana, pineapple, coconut and papaya which are being traded to main export markets in Japan, United States and neighboring Asian countries.
The region, according to DTI, has created a total of 27,006 jobs in nine months, up by 2.8 percent from this year's assigned target of 26,264.
Strict travel warnings of foreign embassies for the whole of Mindanao have indeed brought a setback to Davao region's tourism industry but only in terms of getting foreign visitor arrivals.
DOT 11 said tourism industry has surpassed last year's performance by 8 percent covering only January up to first week of December this year.
Local business travelers were saddened when Davao region lost two important air links with the East Asean Growth Area. Air Philippines stopped its Davao-Manado charter flights last July 3 due to low passenger load. Manado-based businessmen and Mindanaoan traders were having a hard time catching up flight at their convenient time, since Bouraq Airlines, the only carrier now serving the Davao-Manado route, only flies once a week.
However, the entry of an Indonesian airline Merpati Nusantara Airlines (MNA) in September, replaced the void left by Air Philippines. The airline, chartered by Pilman Travel and Tours, serves Davao-Manado route on Thursday every week, complementing Bouraq's service in enhancing people-to-people interaction between Indonesia and Philippines.
Next year, the local business sector expects a bustling movement in Davao's air lanes of Davao as there is now an active air negotiations. A word from DOT 11 said that Malaysian Airlines, which have long stopped Davao-Malaysia flights, is now eyeing again to resume flying the Davao City-Kota Kinabalu route. Local airlines are now also eyeing new domestic routes.
Baguio City on the other hand, is quite optimistic with their economic activity.
Several tourism-related activities are in line for the country's summer capital, boosting tourist arrivals.
For the first half of 2003 alone, several main tourism events are already in the offing. As such, the more than 500-strong commissioned and non-commissioned police personnel must be prepared to safeguard the safety and welfare of the people visiting Baguio to participate in these activities.
These include the month-long Baguio Flower Festival or Panagbenga from February 1 to March 30, 2003.
There is also the annual homecoming of Philippine Military Academy alumni on the third week of February and the PMA graduation in March.
Come April will be the Holy Week retreat where lowlanders, most often than not, travel the historic zigzag route up to Baguio with their families and friends. And then the opening of classes in June.
Interspersed with these tourism come-ons are several big gatherings and conferences that are already scheduled in the city.
Baguio, being the Education Center North of Manila, is also the second home of thousands of students from all over the archipelago and even from other countries, notably Korea and the Middle East, for their respective undergraduate and graduate studies.
There are around 10 big colleges and universities in the city and nearby town of La Trinidad, Benguet, including the premier military institution in the country - the Philippine Military Academy - where future officers and members of the Armed Forces of Philippines undergo rigid training in soldiery.
The Baguio-Benguet Chamber of Commerce and Industry has admitted an increasing trend of business operations in the city this year, and has labeled business in 2002 "worse" than last year.
Not because of the threat to peace and order but due to stiff competition. It is even expecting a stiffer competition in 2003 due to the opening of several shopping malls and the scheduled completion of Shoemart Pines.
BBCCI President Henry Lao said that this is especially bad for smaller businessmen who might be forced to close shop. It is, however, a good sign for the city in terms of the taxes that will be collected.
A regional economic situationer of the National Economic and Development Authority in the Cordilleras noted that "DTI-registered investments amounted to P243.433 million during the second quarter of 2002. Of this, Baguio contributed 55 percent while the six provinces shared the remaining 45 percent. The recorded increased investments was due to registration renewals and new business."
The same report shows that while there was an overall 17 percent increase in exports between the first semester of 2001 and that of 2002, most companies at the Baguio Economic Zone along Loakan Road suffered cuts, particularly during the second semester this year, brought about by the "2000 economic crisis and the September 11 bombing in the U.S. (with reports from Cherry T. Lim of Sun.Star Cebu, Cheryl Cruz of Sun.Star Baguio and Oibone Enobio of Sun.Star Davao)
(January 2, 2003 issue)
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