by IBON Foundation
MANILA — Pointing out that more jobs and lower poverty incidence are more important development indicators, research group IBON criticized Pres. Benigno Aquino for overemphasizing the performance of the local stock market and prospects of higher foreign investments.
IBON was reacting to the statement of Pres. Aquino in a speech before the Filipino-Swiss community in Zurich, Switzerland after attending the World Economic Forum (WEF) in Davos. In the said speech, Aquino claimed that the Philippines might “make it to the Guinness Book of World Records because of the strong performance of our stock exchange” and that “there’s a long line of investors for us… in a wide array of sectors from education and infrastructure to information technology”.
Since Aquino took over in mid-2010, the Philippine Stock Exchange Index (PSEi) has hit new record highs for over 70 times. IBON however, pointed out that the stock market performance is based on speculation and not necessarily founded on sound macroeconomic fundamentals. The better than expected high growth in the gross domestic product (GDP), which grew by 7.1% in the third quarter last year, fuels the upbeat outlook of investors in the stock market, the group explained.
The problem is, the group said, the GDP growth was pushed by the speculative real estate development and the related construction sector. Compounding this is the fact that property development and construction are being stimulated by external drivers, namely the remittances from overseas Filipino workers (OFWs) and foreign investments in the business process outsourcing (BPO) industry.
IBON also questioned the supposed bullishness of foreign investors in the country. The reported $1.2 billion in foreign investments from January to October 2012 was much lower than the $2.2-billion annual average from 2005 to 2009 or the $1.6-billion annual average from 2000 to 2009. Even so, the group stressed that overdependence on foreign investments is also unsustainable over the long term. IBON said that foreign investments could undermine job creation and development when they displace local businesses and livelihood. The think-tank cited the situation in manufacturing wherein transnational corporations (TNCs) cornered 68% of the total revenues of all manufacturing firms listed in the top 1000 corporations of the Philippines in 2011. IBON has also noted the increasing joblessness amid record-high growth, estimating the unemployment rate at 10.5%, which sustains the longest record-high unemployment in the country’s history.
Instead of hyping the soaring GDP growth, the record performance of the stock market, and the supposedly bullish foreign investments, IBON argued that Aquino should explain why these so-called developments are hardly making a dent on joblessness and poverty. In his speech, Aquino acknowledged that “there were still Filipinos trapped in extreme poverty no matter how hard they tried.”
According to the research group, the solution lies in discontinuing the regressive economic policies of previous administrations, including the overdependence on foreign investors to spur growth at the expense of local industries. Reposted by
IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.