Wednesday, June 21, 2017

Kingfisher Park adventure

(Published in Enrich magazine, 2011)

THE MOST IMPORTANT decision you’ve got to make before your adventure at Kingfisher Park Resort in Malbato, Coron, Palawan is whether you want to (1) sweat in the sun or (2) soak-in the sun.

The former is tough but sweet; it’s physical punishment whose ultimate reward is proving you’re one tough dude (or dudette). Exercise sweat tastes good!

The latter is what your average tourist looks for in the average vacation: leisure time to soak-in the sun while taking a long hike; going on fun boat rides; gamboling on the beach and posing for digital jump shots with your mates. And, of course, gorging on the bountiful local cuisine.

Whichever option you choose is bound to create such intense memories that you’re immediately seized by the urge to share it with your gazillion friends on Facebook once you return to “civilization.” Hey, Facebook’s really about bragging rights, isn’t it?

And you’ll have a lot to brag about after vacationing at Kingfisher Park (KP). It’s almost as if you’d rocketed to another planet where clean air’s the rule and not the exception, or to a lush, arboreal moon unspoiled by humans (reminds you of a certain 3D movie, I imagine).

My intense memories of KP, however, are mostly about sweet sweat pouring down my face and soaking my body a scant three hours after my Zest Air turboprop touched down at the Francisco B. Reyes Airport after an hour’s flight from Pasay City.

Pastoral Perfection
The flight’s quickness was my first surprise. It was over so fast that I’d barely dozed-off when the flight attendant’s sweet voice over the intercom announced we were about to land at Busuanga Airport. I peered out the window as the plane went into a gentle left bank to see a ragged, unbroken greenscape flash below me, marred only by a solitary dirt trail that meant humans existed somewhere in this ocean of green.

This perception of immense greenness was reinforced during the 30-minute ride to Coron town, capital of Busuanga Island, where my adventure tour was to start. This 21 kilometer trip due southeast took me past picturesque and verdant fields; past rolling hills unscarred by fire and destructive logging and past brooks so clean local lasses were bathing in them!

It was the idyllic picture of pastoral perfection I’d read about in my grade school textbooks. And it was right here before me. I’d been to a lot of places in this country and had seen my share of stunning bucolic settings. But this was my first trip to Palawan, and my first encounter with this province in Busuanga seemed to confirm Palawan’s billing as the Philippines’ “Last Unspoiled Paradise.”

The roadsides of the all-weather National Highway as you neared Coron town are dotted with firms servicing tourism, which is the island’s main industry apart from fishing. Locals later on told me that many of the fishermen had given up their nets for the quick pesos to be made shuttling an endless stream of tourists from one island destination to another and to the island’s world famous dive sites.

Busuanga is one of the world’s top 10 dive sites and draws many divers from around the world. Wrecks of Japanese ships sunk in the shallow waters of Coron Bay during World War II are divers’ favorites. The peak tourist season lasts from October to May.

As a result of this migration to tourism, fishing is in the decline with only the hardiest continuing this money-losing trade. One tourist guide joked that fishing boats no longer reek of fish but are saturated by the scent of perfumed tourists.

If you want to travel quickly from one tourist destination to another in Busuanga, the best was to do so is by boat. Only the National Highway from Coron in the south to the town of Buluang in the northwest is the main land route in Busuanga.

Traveling elsewhere means you have to go by boat, more specifically by motorized outrigger canoes or bancas. The South China Sea is Busuanga’s E. de los Santos Avenue, as it is for Coron Island, Culion Island and Calauit Island, which are all part of the Calamianes Group of Islands in northern Palawan. The islands in the group remind one of Venice, except the canals in this case are wide salty sea lanes.

I was met at the Zest Air office along Real St. in Coron town by Godofredo “Mang Godie” Contado, KP’s tour guide, who’s been at this job since the resort opened in 1997. He was actually one of the carpenters who built the resort in 1995.

Torturous Trail
After a quick lunch, a ride on one of Coron’s “long-nose” tricycles saw me go back the way I came. A fork in the road, however, took me to the starting point of my adventure tour: a church on a knoll at Sitio Malbato.

Construction of the Santo Rosario church was begun two years ago by the Reyes family, owners of KP and one of the prominent political families in Busuanga. The Mayor and Vice-Mayor of Coron town are brothers, both Reyeses.

Made of limestone, tan colored stones (probably sandstone) and other rocks, the church is dominated by a minimalist wood sculpture of a crucified and wide-awake Christ wearing a crown of real thorns. The altar is another eye-catcher: it stands on the roots of a tree. A stained-glass circular window illustrated by two angels highlights the façade. The Church, however, remains unfinished.

Barely visible in the distance from the Church was our destination: Kubo sa Dagat (Huts on the Sea). It was a torturous, four kilometer trek under a fierce 3:00 pm sun. At the end of this exhausting march was a five-minute banca ride to Kubo sa Dagat, which stands on a sandbar in the middle of the Malbato Bay. Kubo would be my lodging for the next two days.

Although I lugged around just eight kilograms in my valise, the undulating dirt trail winding along the side of Mt. Lunes Santo (Mt. Holy Monday) and the fast pace set by Mang Godie so we’d reach Kubo before sunset made the trek punishing but manageable.

I’d expected to really sweat but my choosing a valise with a shoulder strap instead of an ergonomic backpack was a wrong decision. Constantly shifting the strap from shoulder to shoulder slowed me down and made me sweat much harder.

Since I used to run and still keep in shape by walking long distances, however, these exertions didn’t leave me flat out fatigued. And I loved the way I was breathing heavily. It felt magnificent to happily inhale as much fresh and unpolluted air as I wanted to. Doing this in Metro Manila would be the equivalent of slow suicide.

The unnamed mountain trail, Mang Godie told me, led straight to manganese mines on the other side of Mt. Lunes Santo that used to be active before World War II. By force of habit, I constantly scanned the trail ahead for any signs of fresh or dried cow or carabao dung. My previous excursions taught me there’s no such thing as dried dung: it still stinks if you step on it, no matter what state of decomposition it’s in.

The presence along the trail of masses of “napier grass” used as forage for cattle (and lately as a biofuel) also caused me to be on the lookout for dung, but Mang Godie told me cattle no longer inhabited this part of the island. As I think back on it, the only cows I saw on the island were in a herd grazing close by the airport.

After carefully crossing a rushing brook called Subang Mayor (or Big Brook) on a puny log the width of a grown man’s leg, we came across a hillside dotted with “ironwood” trees. As the name implies, the trees are as tough as iron. Locals cut down the trees using saws. Hacking at the ironwood trees with iron bolos only results in blunted bolo blades. The guard rails at Kubo are made from ironwood.

A surprise was discovering “pitcher plants” grew on the slopes of Mt. Lunes Santo. I knew these carnivorous insect eaters grew in other parts of the Philippines such as mainland Palawan and in Mindanao, but discovering them on the slopes of this mountain was a surprise.  

As we neared the seashore, Mang Godie pointed out another surprise to me. It was a queer tree whose entire bark was colored blood red. Called kulam (pronounced “kooh-lum”) by the locals, the tree only grows near the sea. There are no local superstitions associated with the tree, Mang Godie said.

As we boarded the banca that took us from the landing to Kubo, Mang Godie pointed at what appeared to be wooden tips rising from the shoreline. These, he said, were the roots of young mangrove trees that grow upwards instead of downwards. Much of the shoreline flanking the Kubo has been overrun by mangrove forests, and I’d see that for myself first hand on the morrow.

Kubo sa Dagat
But for now, it was time to get personally acquainted with the Kubo. My first impression of this hotel in the middle of the Malbato Bay—the only one of its kind in the area—was one of toughness: it had withstood time, tide and tourists, and that was an achievement. I’d be safe here and so would my valuables. That was a correct estimate.

The white paint on the beams supporting the roof had all but been brushed off by the wind. The sturdy natok floor planks, the ironwood guard rails and the acacia dining tables had that melancholy patina associated with ancestral homes. Since the resort opened back in 1997, its robust condition was remarkable despite it constantly being battered by wind, rain, sun and sea salt.

After checking into my “veranda suite” as the sole occupant of a room named “Dolphin” with seven empty beds, I checked out the facilities. Apart from my suite (the largest), there are five others, most of which have one double and one single bed.

There are separate shared bathrooms for men and women, both of which are clean and sanitary. The men’s bathroom has two bath stalls and four flush toilets, a pleasant surprise, since the resort has its own huge septic tank.

Water is delivered by an undersea pipe from Coron. The water pipe, installed only two years ago, also means you can do your own laundry or have the polite resort staff do it for you for a fee.

The main dining area also doubles as the resort’s pier. It seats some 50 guests and is the perfect spot for watching the sun set over Malbato Bay. Guests spend the evenings in conversation here or sleep here. Interacting with one another is about the only activity available every evening since there isn’t a TV, karaoke, DVD player or computer on the island.

That’s because electricity is scarce. The resort’s electricity is provided by roof-mounted solar panels, and this power is just enough for a few lights and to charge your celphone or small batteries such as those for digital cameras. You can’t plug your laptop or you’ll drain the system’s solar batteries. You also can’t iron your clothes for the same reason.

If you’ve got SmartBRO on your laptop, you’re in luck since it means you remain connected to the internet. Sorry for Globe subscribers: no signal. Smart celphones also receive a stronger signal than do Globe celphones because the former has more celsites on Busuanga. There’s no cel service for Sun Cellular on Kubo.

I took my first meal (dinner) along with a group of six accountants on a business/vacation trip. The cuisine was not unexpected: adobong alimango, calamares rings, tilapia, rice, adobo and sweet mangoes. Coffee and tea are bottomless and mineral water is always available for free. Aling Juaning Zabalo, the chef, has been preparing meals since joining the Kubo’s staff in 1997 and her knowledge of Filipino and international cuisine is immense.

Kubo is the nod to civilization in the otherwise all-natural Kingfisher Park. Spanning 400 acres, the park is a wildlife sanctuary consisting of mangrove forests, islets, tropical forests, hills, a mountain and numerous species of animals, fishes and birds. It’s owned and managed by the Reyeses who bought the land in the 1950s.

Immediately after dinner was a feast for the eyes called “Starry Starry Night.” And, no, we didn’t’ sing this 1970s hit song a capella. A night boat ride took us from Kubo to the opposite shore. As we neared the shoreline we could see trees lit by what appeared to be hundreds of LEDs bobbing around in mid-air.

These weren’t light bulbs, however. They were colonies of fireflies, or aninipot in the dialect, flitting around pagatpat trees, the leaves of which are their main food source. The sight is normally described by locals as “Living Christmas Trees.”

For city people who’ve never seen a firefly at night or a firefly swarm for that matter, the sight is fantastic. “Wow!” and “Picture! Picture!” are common exclamations of wonder at the sight. Sadly, however, you aren’t allowed to take photos using a flash (it would scare away the fireflies). You can only watch in awe at a spectacular sight city dwellers no longer behold.

And the stars look enormous and brighter than they do in the city. Venus was especially noticeable, huge and unblinking as she was against a clear sky festooned with winking stars. The only explanation for the stars seeming so close is because there isn’t a blanket of smog and pollution obscuring them. So this is what heaven without pollution really looks like.

Going to sleep, needless to say, was a delight. The only sound alien to my Manileño’s ears was that of waves constantly slapping against the concrete stanchions of the veranda. The night is so deathly quiet it’s scary—but only if you’re alone. With someone else, you could describe the evenings as really romantic.

Mangrove Kayaking
Dawn saw me take my first long look at Malbato Bay and the Kubo. Envision Malbato Bay in the shape of the capital letter “Q.” The diagonal stroke of the letter represents one of only two entrances to the bay. Kubo is located to the left of this stroke, and faces due north.

The other entrance to the bay is to the northwest and we took this passage enroute to the second stage of my adventure tour: mangrove kayaking and a visit to a newly discovered hot spring tucked deep in the mangrove forest.

The motorized banca ride to the mangrove forest (or bakawan) took about 30 minutes. Navigating the ruyukan or the narrow “streets” between mangrove islands was a slow process. At low tide you can actually wade in the mangrove, but kayaking is only possible during high tide.

With Mang Godie paddling and me taking photos, we wended our way through the mangrove maze. We landed and made our way through a tropical forest and past a bewildering array of trees and plants.

What made a lasting impression on me was walking through a forest of buho, or small bamboo plants that bent inwards to form a spectacular green arch over the forest trail. Buho is also the material used for the roof of both the Kubo and the Santo Rosario church.

After watching three workmen clear vegetation at the hot springs, we headed back to the kayak. The forest bordering this mangrove is home to host of animal species, some of which we think only exist in other countries: armadillos, skunks (pantot), anteaters, porcupines, wild boars, monkeys and monitor lizards (bayawak). I only saw a bayawak as it rushed past us and that for only an instant. But I did hear monkeys and woodpeckers screaming from somewhere in the forest.

Family Tours
The adventure package I went on is only one of many a tourist can choose from. You can find information about these packages at

Most of these packages are fit for families or for corporate types, and are definitely less exhausting than a four kilometer walk, Lunes Santo trekking and mountain biking through this mountain. The only reason I didn’t go mountain biking was that I ran out of time. A two days stay isn’t enough to explore most of at Kingfisher Park. That’s why you’ve got to choose your packages carefully.

The bird watching package has a charm of its own and one might even get to glimpse the bird for whom the park is named. A popular family package is a visit to D' Fisherman's Haven in Sabang on the northeastern part of Busuanga. D' Fisherman's Haven has a white sand beach and offers wind, surf and sun.

You’ve got to go back to experience Kingfisher Park to the fullest. I’m seriously considering it. 

Tuesday, February 28, 2017

2013 and beyond: Renaissance for growth. Can it continue?

(Published in the ECCP Business Review, 2012)

THE YEAR 2013 will be a happy new year. And this doesn’t refer to the traditional holiday greeting.

Most major metrics point to an improving economy in 2013 buoyed by multi-billion peso election spending and anchored on strong economic fundamentals that made the Philippines Southeast Asia's leading growth economy in 2012.

The long-term outlook until 2016 -- which, coincidentally marks the end of President Benigno Simeon Aquino's six-year term -- is again optimistic. Among the reasons: the long-sought dissipation of the Eurozone debt crisis, which is at last easing, and a Philippine upgrade to investment status by some or all three of the international ratings agencies.

The European Union is the Philippines largest single export destination. It currently accounts for 13% of total Philippine exports and 17% of overseas Filipino remittances. Exports constitute about two-fifths of the Philippines’ consumption-driven economy.

The investment upgrade, while more of a boost to government morale, is nonetheless seen as validating the success of President Aquino's economic platform founded on boosting transparency, leveling the business playing field and restoring trust in government.

It should somewhat help remedy the Philippines' nagging inability to secure more foreign direct investments (FDIs) because of poor infrastructure and inconsistent investment policies.

“We have to address policy inconsistencies. There are so many inconsistencies, especially in mining, utilities and infrastructure," said Victor Abola, senior economist at the University of Asia and the Pacific.

The Philippine share of FDIs going into ASEAN in the first-half of 2012 was among the smallest in the region, said the UN Conference on Trade and Development.

GDP growth uptrend
Both the government's economic managers and foreign experts, however, agree that Philippine gross domestic product (GDP) growth in 2013 will exceed 5%. This growth could expand to 8.5% by 2016. Socioeconomic Planning Secretary Arsenio Balisacan said the country will most likely grow from 6% to 7% in 2012.

"We are already at 6.5% (in the third quarter), and the fourth quarter is always good for us because of the holiday spending. We kept growth and fiscal targets for 2012 to 2014.

"For 2013 onwards, we want to stay conservative. We recognize that there are still uncertainties external to the country."

The government targets 6% to 7% growth in 2013; 6.5% to 7.5% in 2014; 7% to 8% in 2015 and 7.5% to 8.5% in 2016.

It also hopes to keep the fiscal deficit capped at 2.6% of GDP in 2012 and 2% in 2013 and 2014.

The Philippine economy grew 7.1% in the third quarter, the fastest pace since 2010. It was a result that surprised even the government since this quarter is historically always the slowest in output.

This “unprecedented growth,” said the government, was better than Vietnam’s 4.7%; Thailand’s 3%; Indonesia’s 6.2% and Malaysia’s 5.2%.

The domestic market driven growth was led by construction (up 24.3% year-on-year, mainly on the condominium boom) and manufacturing (up 5.7% year-on-year). The government claims the spike in these sectors led to more jobs.

The services sector, which includes the robust IT-BPO industry, will again be a leading growth driver from 2013 onwards. Economists, however, warn that the Philippines must develop its own industries for economic growth to reach 7% to 8%.

The Philippines must also create more than one million jobs to sustain growth at this high level, but this task might well prove a serious challenge considering current realities and the paucity of FDIs.

High unemployment continues to plague the Philippines despite rising growth. The official Philippine unemployment rate of 7% in the third quarter of 2012 was the highest in ASEAN. Only Myanmar and Indonesia had unemployment rates above 4%.

Underemployment in the Philippines remains stubbornly high, estimated at almost 25%. These numbers emphasize the need for job creation and highlight the reason why 10% of Filipinos are working abroad.

More muscle will be added to the economy by government plans to increase infrastructure spending to a record level. Government also plans to invest P640 billion in roads and airports to prod growth to a high 7% in 2013 and beyond.

Lower inflation but higher prices
Inflation did not put a brake on growth in 2012 and is expected to reprise this role in 2013. It slowed to 2.8% in November 2012 year-on-year on cheaper food and gasoline prices. Headline inflation in 2011 was 4.8%.

Full year 2012 headline inflation is placed at 3.2%. But this was before the P11.7 billion damage to agriculture in Mindanao inflicted by Typhoon Pablo in early December.

The November headline inflation, however, is below government expectations of 3% to 5% from 2012 to 2014. Core inflation in November fell to 3.4% from 3.6% in October and 4.5% year-on-year.

The government cut its inflation forecast for 2013 to 3.1% from an earlier 3.9% during the last meeting of for the year of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP). This lower inflation rate for 2013 took into account a rise in wages and salaries; an upcoming fare increase for the MRT and LRT intercity rail systems; higher jeepney fares and more expensive rice prices.

Record stock market in the making
The Philippine stock market is already reflecting investor exuberance at the Philippines’ strong fundamentals and the movement of “hot” short-term money moving to emerging markets. It closed at a new all-time high of 5,763.64 on December 6, mostly due to lower inflation, said analysts.

The main index of the Philippine Stock Exchange, Inc. and its sub-indices reported gains, especially those that were consumer driven like banks and property. PSEi or the Philippine Stock Exchange Composite Index ended a seven-day rally on December 5 after peaking at 5,706.28 on December 4 thereby breaching the 5,700 mark for the first time.

No new taxes in 2013
President Aquino’s pledge not to raise taxes in 2013 is another cause for business optimism. Instead of new taxes, the government will raise revenues through more efficient tax collections and two reform bills: the “sin tax” and the fiscal incentives bill.

The sin tax bill, which passed Congress on December 11, increases the excise or specific taxes on "sin" products such as tobacco and alcohol. It could add some P34 billion to government revenues in 2013 and P184 billion in total revenues until 2016.

The fiscal incentives bill seeks to rationalize and simplify the grant and administration of fiscal and non-fiscal incentives to promote foreign and domestic investments. The House of Representatives and the Senate each have their own version of the bill that has to be reconciled for the bill to pass into law. It is the aim of the Administration to create more transparency and accountability in granting incentives in future.

The Joint Foreign Chambers of the Philippines, of which the European Chamber of Commerce of the Philippines (ECCP) is a member, commented that removing the income tax holidays might negatively impact Philippine competitiveness as an investment destination within the Asia-Pacific.

Peso to stay muscular
The peso’s strength (about P41.00 to US$1.00 in mid-December) has again been both pleasant and alarming. The peso gained some 7% in 2012, the best performer after the Korean won among Asia’s 11 most-widely traded currencies. The peso’s exchange rate in December 2011 averaged P43.64 to a dollar.

Exporters are worried. To calm their fears, the government has promised to remain vigilant against the continuing rise of the peso. Further strengthening will threaten to erode Philippine export earnings and the purchasing power of OFW remittances, and lead to a surge in imports and hot money. The government shunned a further interest rate cut in December as a means of weakening the peso.

The consensus is for a strong peso in 2013 and 2014. The ING Group sees the peso staying strong against the dollar in the next two years, and to trade near the P40.00 to US$1.00 level. The main concern among policymakers is the peso falling below the critical P40.00 to US$1.00 barrier, an event that could conceivably occur in the next two years.

Interest rates to rise in 2013
A decision by the BSP on December 13 to keep its benchmark interest rate unchanged at 3.5% was a clear signal the Philippine economy is now racing along on a high gear that makes monetary intervention unnecessary at this point.

Deputy Governor Diwa Guinigundo said the Philippine economy demonstrated resiliency in the first three quarters.

“There’s very little need for assistance from monetary policy.”

The BSP decision meant the economy had withstood the global slowdown better than most and that inflation, which could have hammered growth, is being kept in check. BSP cut borrowing costs by a total 100 basis points this year.

Interest rates, however, are widely expected to rise in 2013 to head-off inflationary pressure. Analysts see the BSP raising interest rates by 25 basis points in the first quarter of 2013 and by another 25 basis points in the second quarter.

The BSP cut interest rates by a quarter percentage point in October  2012 to record lows. The rate paid by BSP to lenders for overnight deposits now stands at 3.5% while the rate borrowers pay for overnight credit from BSP fell to 5.5%.

It was the central bank's fourth rate cut in 2012 and was meant to encourage investment and consumption to guard against risks associated with weaker overseas demand.

Record remittances—again
Where will the economy be without the pick-me-up from overseas Filipino worker (OFW) remittances?  The answer becomes apparent when one considers remittances still account for 10% of GDP, driving the domestic market and GDP growth.

Remittances are expected to hit a record US$21.2 billion in 2012 and rise again to a new record of US$22.2 billion in 2013. The strong peso, however, is the greatest threat to these growth assumptions.

Close to 80% of remittances through banks come from the United States, Canada, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates and Singapore. The Philippines is the world’s third-largest recipient of remittances behind India and China.

The government, however, has noticed a decrease in the economy's dependence on remittances since 2011. The National Economic and Development Authority (NEDA) observed that the country’s Net Primary Income from Abroad (NFIA) has been falling and that this can be seen in the Gross National Income (GNI). NFIA includes remittances and is a component of GNI.

NEDA said NFIA grew by only 1% in 2011 while GDP growth came to 3.9%. Government data showed GDP growing at 7.6% in 2010 while NFIA grew 10%.

Mobile remittances, the next big thing in remittances, has not gained traction as a cost-cutting tool since governments remain uncertain as to how to regulate remittances using mobile phones.

Exports: key growth engine to recover
Exports traditionally contribute two-fifths of GDP and undoubtedly remain key to attaining the envisaged high GDP growth.

Electronic products are the Philippines leading export while the inputs used to make these products are the largest import items. These commodity groups will dominate trade in 2013, and will be among the first to surge with a recovery in its main markets, the USA and Europe.

Conversely, weak exports have a profoundly negative effect on growth.  Weak exports were the major reason for the GDP growth plunge in 2011. The government estimates that the export plunge cut the Philippines’ potential GDP growth by 2.2 percentage points.

Sturdy investor confidence
Florencio Abad, Secretary of the Department of Budget and Management, said high growth will also create investor confidence in the economy.

“We are, in other words, creating an environment that’s ripe for both local and foreign investments and stable enough to keep our fiscal performance at a reasonable high,” he said.

“We are optimistic that our fourth-quarter growth will remain as energetic. Public consumption will most definitely stay robust, fueled by high consumption levels during the holidays, continuing investments in public and private infrastructure, and the kick-start of election-related spending this Christmas season.”

Moody’s Investors Service raised the Philippines’ credit rating to one step below investment grade in October leading to investment pledges from European and other multinational firms.

Strong business optimism
ECCP President Michael Raeuber noted the prevailing business optimism among European companies doing business in the Philippines.

"We have to credit President Aquino and his team for the reforms, especially the emphasis on ethical government and integrity that have helped restore business confidence and started the process towards  the level playing field," Raeuber said.

Raeuber noted that President Aquino is a staunch supporter of the “Integrity Initiative,” a two-year old campaign co-founded by ECCP that has become the business sector’s champion in the fight against corruption in government and the private sector.

President Aquino noted that the Integrity Initiative has played a role in the Philippines’ economic recovery by its untiring advocacy to create a level business playing field. He revealed the government is directing the gains from Integrity into projects and programs that will make the Philippines more competitive.

“We have been channeling the budget into investments in our people, education, health, poverty alleviation and infrastructure because we recognize that sustaining our momentum requires a citizenry that can compete in the world arena,” he said.

“At the bottom line of our strategy is ensuring a level playing field, one that is stable, rules-based and whose outcomes are predictable,” the President said.

Election spending boost
In a mid-year estimate, the government’s Development Budget Coordination Committee (DBCC) said the growth drivers for 2013 will be strong domestic demand; more government infrastructure spending that will likely add P180 billion to the deficit; a moderate peso depreciation that will continue to spur spending by OFWs; a 2.5% growth in agriculture and a 25 basis point policy rate cut by the BSP that will bring overnight lending and borrowing rates to record lows.

Hindsight apparently confirms the soundness of most of these premises. The growth estimate for agriculture has now become suspect in light of P11.7 billion damage inflicted on Mindanao’s agriculture by powerful Typhoon Pablo (Bopha) during the first week of December.

The Eurozone and the USA are the Philippines’ key export markets and major sources of FDIs. This is the reason the Eurozone crisis and the halting economic recovery of the USA could restrict the Philippines’ growth to the higher levels dreamt of by government.

In the short-term, however, the key critical factor for Philippine growth in 2013 will be the general elections scheduled for May 13.

Over 18,000 officials, mostly at the local level, will be elected in this mid-term election. The scale of these elections is massive. Up for election are 12 senators, 229 district members of the House of Representatives, 80 provincial governors, 138 city mayors and 1,496 municipal mayors.

It is these elected officials at the provincial, town and city levels that will, for good or ill, exert an excessive influence on who succeeds President Aquino in 2016.

The aphorism that all Philippine elections are local elections--including that for the presidency--will again be invariably proven during the presidential election in 2016. Hence, the importance to President Aquino that the local candidates of his Liberal Party and its allies do well or dominate the May 2013 local elections.

Stacking the deck is the name of this political game. The opposition realizes this full well, too.

And at this juncture, only President Aquino's chosen successor can be counted on to continue his far-reaching reforms that have been largely responsible for this renaissance in Philippine economic growth and integrity. Given this situation and the uncertainties regarding the succession in 2016, it is essential that the reforms of the Aquino administration be institutionalized before the team leaves office.

Massive election spending in the 2007 and 2010 elections (the latter a presidential one) contributed to the high economic growth rates in those years and a spike in consumer spending. Election spending in 2013 will almost certainly boost growth and will most probably drive it over 7%. The economy last peaked in 2010, an election year.

The Philippines’ three highest GDP growth rates in the past decade took place in 2004, 2007 and 2010, all of which were election years. And except for 2009, the next highest growth rates were the years before election years, or in 2003 and 2006.

Secretary Abad said there might be some election spending as early as the end of this year. This, plus consumer spending during the Christmas holiday, usually boosts GDP growth, he said. Total consumption traditionally accounts for some 70% of GDP.

"Christmas is the time where Christmas and campaigning mix . . . The rush for spending for Christmas and preparations for the elections will further boost the economy," he said.

Abad noted that the 7.3% GDP growth in 2010—an election year—was the highest in 34 years.

"I don't know to what extent (election spending will boost 2013 economy), but you saw 2010.”

International financial institutions were also positive about Philippine growth in 2012. The World Bank upgraded its growth forecast to 5% from 4.8% after the Asian Development Bank increased its growth estimate to 5.5% from 4.8%.

“The Philippine economy continues to show strength despite global and regional economic slowdown,” the ADB said.

ADB cited the rise in investments by local firms, robust household consumption, and increase in government spending as factors behind the latest growth forecast.

ADB said the sources of growth are investments by local firms, robust household consumption, and an increase in government spending. It expects the economy to grow by 5% in 2013.

Metropolitan Bank and Trust Company, the second largest Philippine bank, raised its GDP growth forecast to 6.6% from 5.5% due to the robust GDP expansion in the first nine months. It said household consumption, which accounts for two-thirds of GDP, will drive growth. More remittances, a rise in government spending and benign inflation will also contribute to this growth.

Jollibee Foods Corporation, the country's largest fastfood firm, expects record sales and profit in 2012 due, in part, to early election spending later in the year.

CEO Tony Tan Caktiong believes spending for the 2013 mid-term elections will boost local sales that constitute 80% of the company's system-wide sales.

"Because of the campaign there are a lot of funds going into the society so I think that's basically the reason that boosts consumption.”

High unemployment to persist
That Philippines’ rosy economic outlook, however, has apparently had no effect on reducing what is Southeast Asia’s highest unemployment rate. The 7.1% GDP growth, when set against the unemployment rate of 7% in the same third quarter, reveals that growth’s benefits are not “trickling down” to consumers, but are instead being reinvested in non-productive financial instruments that boost personal income.

By comparison, Vietnam’s unemployment rate stood at 2%; Thailand’s at 0.9%; Indonesia’s at 6.5% and Malaysia’s at 3%. These countries have also had much higher levels of foreign direct investments that create jobs.

To its credit, the government admitted that trickle down growth is more easily felt by those in the business sector. It said high growth has instead allowed the government to spend more for the people, enabling more citizens to “feel” the benefits of growth through its “social protection strategy.”

“We want to make sure that this improvement in the economy won’t benefit only those who invest in the stock exchange. That’s why we call it inclusive growth,” said Presidential spokesperson Edwin Lacierda.

The Asian Development Bank has praised the government’s social protection strategy, saying the latter’s “Conditional Cash Transfer Program” to uproot extreme poverty costs less than 0.5% of GDP but helps 15 million people in a population of 90 million.

Far too many will remain poor
Growth has also not made a notable dent in reducing the ranks of the poor, said the ADB. 

“Despite growth, poverty incidence in the Philippines rose from 2003 to 2009,” said Neeraj Jain, ADB country director for the Philippines. “That is a cause for concern.”

The Philippines defines poor as anyone earning less than P16,841 a year. This comes to about P46.00 or US$1.00 per day, which is the generally accepted definition of poverty worldwide. About 27% of Filipinos fit this bill.

Jain said the Philippines must implement policies that bring investments to sectors that can provide jobs for the poor, especially those without a college education.

There has to be more focus on ‘inclusive growth’; the private sector needs to get involved in education; the first steps will be made in the K+12 programs. ECCP would like to see more emphasis on dual education/apprenticeship programs.

In 2015, the government intends to reduce poverty incidence to 16.6% or half the 33.1% poverty rate in 1991. The high growth in 2012; the expected growth until 2016 and relatively benign inflation make the government confident of achieving this goal.