Saturday, 29 January 2011

PH poised for sustained 7% growth

Economist cites improved governance, infra project
By Riza T. Olchondra
Philippine Daily Inquirer

THE PHILIPPINES is poised to grow 7 percent or better in the next six to 10 years—the same feat that India and Vietnam had accomplished in the last decade, according to economist Bernardo M. Villegas, who co-founded the University of Asia and the Pacific (formerly known as the Center for Research and Communication).

He said the Philippines could even sustain an average gross domestic product (GDP) growth of 7-9 percent in the next six years, given significant improvements in governance and infrastructure as well as strong remittance inflows.

In a briefing, Villegas said that such high level of sustained growth was crucial in curbing the poverty level for the next 10 years to 15 percent from the current 30 percent of the population.

He said inflation could be in the 4-5 percent range. “I would say 4.3 percent. This is nothing to worry about,” Villegas said, adding that he expected interest rates to remain low.

This means investors with good projects will have no problem getting financing.

Villegas said agribusiness and water infrastructure projects would be crucial moving forward as demand for high-value crops was expected to surge in increasingly affluent markets like China.

Another good sign for the Philippines was that there existed a lot of room for investments here, he added.

Villegas said the savings rate was at an all-time high of 30 percent of GDP while the investment rate was only 17 percent, leaving room for big-ticket projects in the high-growth sectors to be funded by local money.

An investment-led growth was getting strong support from the foreign investment community, Villegas said, citing the Joint For eign Chambers’ roadmap dubbed “Arangkada Philippines.”

The roadmap describes how a 7- to 9-percent growth in GDP can be achieved in the next five to six years through investments in seven key industries.

These are agribusiness, business process outsourcing, creative industries, infrastructure, manufacturing and logistics, mining and tourism, medical travel and retirement.

What was encouraging was that these were the same “sunrise industries” in which the local taipans and conglomerates were investing heavily, Villegas said.

He said the likes of San Miguel Corp., the SM group, the Metro Pacific group, the Ayalas, First Philippine Holdings and the Phinma group, among others, were leading the way to an investment-led recovery.

However, foreign investments must complement local investments if the Philippines was to sustain its target growth rates, Villegas pointed out.

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