Feeling the heat: A vendor preparing his umbrella as hot days continue in Manila. Businesses’ less-than-upbeat sentiment is justified as they are directly at risk, and suffer from the constraints and roadblocks that keep the economy from achieving its full potential. — AP
MANY problems keep the ordinary Filipino up at night. A recent Pulse Asia survey commissioned by the Stratbase Institute said seven in 10 Filipinos are deeply concerned with the escalating inflation crisis. This concern is first on the list of respondents’ urgent national concerns.
Worse, 74% of respondents believe that the current administration’s response to this concern is inadequate.
Still, despite the cost-of-living crisis in the country, consumers remain optimistic about our prospects.
The Bangko Sentral ng Pilipinas (BSP) found that in the first quarter of this year, consumer sentiment improved, according to its consumer outlook index. People expect additional income and greater availability of permanent employment.
Unfortunately, businesses in the Philippines are not as optimistic. The BSP, in its business expectations survey report, found that in the same period, businesses grappled with dwindling demand leading to a slowdown in economic activities, rising inflation, and the threat of climate-induced disruptions.
We are already feeling this through the prevailing El Nino conditions.
Whose concerns, then, more accurately reflect the Philippines’ current state? Shall we go by businesses’ more realistic and less upbeat outlook because we could presume they would be more objective in their assessment of the business environment?
Or should consumers’ expectations be given more weight, since it is they who directly experience the effects of economic ebbs and flows?
How are we to reconcile these seemingly conflicting or incongruous beliefs about the coming days? Perhaps we should give credence to both.
Across South-East Asia, the Philippines is often compared with Vietnam and Thailand in terms of economic makeup and prospects. Vietnam is touted as a consistent outperformer in attracting foreign investments, outpacing the Philippines as an ideal investment destination.
Since 2014, the World Bank has underscored the need for the Philippines to revise the economic provisions of its Constitution, specifically its strict restrictions against foreign ownership.
Indeed, in this globalised business environment, the Philippines can only claim to embrace economic liberalisation by dismantling barriers to foreign ownership.
The merits of opening up our industries to foreign ownership have been cited numerous times.
Foreign investment boosts the economy because it causes the improvement of infrastructure and enables industries to thrive.
Moreover, it generates jobs for Filipinos, bringing them a sustainable source of income and allowing them to improve their quality of life. And then they would not worry too much about their cost of living.
The Philippines is the sole Asean country to still have numerous constitutional constraints on foreign investment: This is a strategic disadvantage that we must take active steps to change.
We must position ourselves to be competitive in the international economic arena. We have to position ourselves as a favourable location on the global investment map especially since economic giants are looking to de-risk and decouple.
We have been laggards for far too long because we have been crippled by these restrictions.
Revisiting and amending the economic provisions of the Constitution should not be equated to any political moves that could serve specific interests.
By focusing only on the economic provisions, we assert that there is a more fundamental, significantly more important beneficiary of initiatives to amend the Constitution – the Filipino people.
And it appears, as well, that Filipinos are aware of the nuances of Charter change. The same Pulse Asia survey of March 2024 revealed that nearly 40% of respondents advocate for a more inclusive approach to economic growth and see increased foreign participation in local businesses as a potential catalyst.
If the people themselves have this sentiment, then this should be supported by policies that foster a conducive environment for foreign investors to enhance the nation’s economic trajectory.
Yet another Stratbase-commissioned Pulse Asia survey from September 2023 shows that Filipinos across diverse demographics and socioeconomic strata believe that strategic partnerships with trusted allies are pivotal to economic security.
That survey revealed that the United States, Japan and Australia stand out as the most favoured countries with which the Philippines must collaborate, not only for defence security but also for economic security which is felt more acutely by the people.
Businesses’ less-than-upbeat sentiment is justified as they are directly at risk, and suffer from the constraints and roadblocks that keep our economy from achieving its full potential.
But consumers’ optimistic take should also be considered: There remains room for growth and improvement despite economic challenges, and one way is to acknowledge – and act on – the fact that we need foreign investments to jump-start our industries.
The government must take heed of this. — Philippine Daily Inquirer/ANN
Dindo Manhit is the founder and chief executive officer of the Stratbase Group. The views expressed here are the writer’s own.
