Consumption Driven Philippine Economy

[jpdm]

Attention: Philippine government!

‘Consumption driven’



December 3, 2013 8:01 pm
by MIKE WOOTTON
VIEWS FROM A BRIT

Well, the Philippine economy is certainly consumption driven, to a fault it seems and what is more the government pundits boast about it—well in the Philippines it is not something to boast about. China is trying to get their economy more consumption driven but the Chinese won’t spend money—the “savings bug” will be with them for a long time yet. Of course, there is nothing much easier than spending money in one of the many glittery shopping malls that continue to mushroom all over the place. Like the United Kingdom’s High Streets, they all have much the same outlets in them but occasionally you see something different, then you go back to have another look, and “poof” it’s gone! Something “a bit different” tends not to last too long around here.


Much of the money that is spent in retail outlets is from the $14 billion a year remitted by the overseas Filipino worker community of about 10 million or 36 percent of the workforce. Filipinos, it seems, have a proclivity for shopping. Christmas is coming and providing the annual occasion for the regular gluttony of shopping; even this last weekend the traffic was getting very congested around the drop off points for the malls.

What are sold in the malls are rarely made in the Philippines out of natural products grown in the Philippines, thus what are sold are in the vast majority imported goods and the majority of those imports come from China, from which the Philippines sources 13 percent of its $78 billion’s worth per year of imports (based on official statistics and therefore not including the reported $20 billion per year of “smuggled goods” which if counted would knock the even now fairly dismal balance of trade figures very significantly).


The more malls there are, the more sales of expensive imported goods there will be, and the more exporting will be required by the Philippines in order to offset massive import dependency; but consumption as a major contributor to economic growth will surely rise to keep Chinese and other exporter nations workers in jobs!

Rather than developing real estate for retail purposes, perhaps a bit more emphasis could be given to using those same investment monies for developing manufacturing facilities which would produce good quality products from local materials, and create jobs with higher skill levels than required for five million sales assistants and managers . . .? In the long run, short of a miracle or two or the creation of more real skilled jobs, the market for expensive imported consumer products must diminish.

Mike can be contacted at mawootton*gmail.com

source: ?Consumption driven? | The Manila Times Online

[vinj]

This has been the obvious quite a while unfortunately.

We don't have a strong manufacturing sector but rather rely a lot on services and remittances. Pag pasok ng OFW money then it's off to the mall to buy-buy-buy. We will not have a strong manufacturing sector because of cost of high electricity costs, labor issues (just ask those idiot leftists), logistic concerns, red tape (and that is an understatement), and lack of a market that can meet real economies of scale unless you are a regional trader.

[uls]

posted 01-23-2010

http://tsikot.com/forums/politics-ec...ucky%92-67113/

from the article posted above:

Boasting of her accomplishments after nine years in office, Arroyo said the peso was stronger, tax reforms were in place, and social services available to most Filipinos.

"Ito lang yata ang administrasyon na lumakas ang piso kaysa humina [This seems to be the only administration where the peso got stronger instead of weaker]," she said.

GMA, you are not responsible for the strong peso

the peso is strong coz 10% of the population is working abroad, sending foreign currency to the Phils., pumping up the country's foreign currency reserves

and thank the US Fed's monetary policy for the weak dollar

don't thank yourself

we're not stupid

kaya mo bolahin ang mga ignorant masses

di kami

“Ang papel ko ay ihanda ang pundasyon. . . . Andyan na yan, ang pundasyon ng matatag na ekonomiya at inaasahan natin na itutuloy niya iyon para maramdaman ng mga Pilipino [My role is to lay down the foundation…It’s there, the foundation of a strong economy and we expect that this will be felt by the Filipinos],” Arroyo said.

pundasyon my ass

your pundasyon is an economy that's entirely dependent on labor export

you have an economy that's mostly end-user consumption, very little production

a lot of businesses here are trading businesses, not goods-producing businesses

we import everything

and we use dollars earned by OFWs to pay for imports

that's our economy

you think the Phils. is getting richer coz OFWs keep sending dollars?

NO

our OFW dollar earnings go to exporting countries

we are tranferring our wealth to other countries

we make other countries richer (like China, Japan, Korea etc) coz we buy their goods

they invest in more production, which employs more of their people, their people have more money, their people's standard of living rises

that makes them richer

get it?

the OFW trend will go on for years (and decades) to come

coz our country is already addicted to OFW earnings

soon 15%, 20% of the population will be working abroad

the Philippines has become a manpower agency

that's your economy GMA

again, we are not stupid

BTW,

coz the Phils. has a steady stream of forex earnings,

our govt uses that as "collateral" to borrow money

(hey, may pera kami pumapasok, pwede niyo kami pautangin, may pambayad kami)

coz our forex earnings keep growing, it allows more borrowing

foreign banks love lending us money coz they make tons of money underwriting our bonds

and bond investors love our bonds coz of the high yield

as long as OFWs keep sending money to the Phils.

the Phils. can keep borrowing money

it's clear the govt, and the country, will fail without OFW remittances

that's your economy, GMA

and the next president will have no choice but to pick up where you left off

he will just keep encouraging pinoys to go abroad

[uls]

from the article posted by jpdm:

The more malls there are, the more sales of expensive imported goods there will be, and the more exporting will be required by the Philippines in order to offset massive import dependency; but consumption as a major contributor to economic growth will surely rise to keep Chinese and other exporter nations workers in jobs!

like i said we make China and other exporters richer

Rather than developing real estate for retail purposes, perhaps a bit more emphasis could be given to using those same investment monies for developing manufacturing facilities which would produce good quality products from local materials, and create jobs with higher skill levels than required for five million sales assistants and managers . . .? In the long run, short of a miracle or two or the creation of more real skilled jobs, the market for expensive imported consumer products must diminish.

we've discussed this before. remember those threads about building a pinoy car? my side is it's not gonna happen. people said i'm too negative

well years have passed and there still isnt a massed-produced original pinoy car

it's not coz there's no capital

there's a lot of capital out there

but investors aren't willing to direct capital toward mass-producing original pinoy cars coz it's too risky

that was my argument

our capitalists would rather invest their capital in real estate (building malls and condos)

the other side kept posting about how talented pinoys are. that pinoys can design cars and all that. but what are you gonna do with designs when nobody is willing invest in turning those designs into reality?

[vinj]

^ Hehe... looking at what's been happening, Aquino ver 2.0 has been less than lucky.

[kinyo]

proverb of the day

"Ang kurap na gobyerno, paborito nya OFW"

[Stoner]

Because majority of our officials have no long term goal beyond the next election and/or are busy trying to cover their tracks when they end up getting sued after stepping down.

[_Cathy_]

Good for the Ayalas that they are able to hold and grow their wealth for over a century.

Sent from my GT-N7100 using Tsikot Car Forums mobile app

[Monseratto]

There was already a manufacturing base economy but they all left when the government and labor unions screwed them up. That is why the philippines is not in any investor's radar. Also our export of labor is not exclusive and may not be sustainable. Other countries are now doing the same thing. Just look at the number of Indonesian DH in HK...

[niky]

So many tens of thousands here in the south screwed out of high paying jobs for multinationals due to labor unrest instigated by the KMU...

Guys with housing, medical and educational benefits... now relegated back to the life of the barely-above-poverty-level blue collar worker. :grumpy:

[jpdm]

This might help revive manufacturing in the country...

PCCI seeks to lift constraints to inclusive growth


by Bernie Magkilat
December 12, 2013

(edited)

Atty. Miguel Varela, President of the Philippine Chamber of Commerce and Industry, said that while the economy is riding high with more than 7% in GDP growth over the last three quarters and industry sector experiencing gradual revival, decisive action is needed to keep the momentum going.


Varela also mentioned that the issue of rising cost of fuel and electricity was an annoying issue, but the core issue to be resolved was to ensure the adequacy, reliability and reasonable pricing of energy.

“It may be high time that government aggressively promote exploration for indigenous sources of fuel and in the process address how to make it attractive to bring in investors, mainly with the issue of business permitting and licensing taking from more than a hundred to a thousand,” he said.

The rate increase by Meralco, he said, would hurt consumers, and, particularly in the emergency meeting of PCCI on the Meralco rate increase issue, the exporters were among the most vocal about the impact on their competitiveness in the global market.

“Open access, which has earlier been touted as something that could help large users, will not be much help as there is not enough power supply, a situation that has come to the fore with the latest increase in rates,” he said.

The coming year, he said, is critical year for action that requires decisive movement on a variety of issues.

First is the sense of urgency to rebuild the cities and towns in the Visayas where damage to infrastructure and livelihood, not to mention loss of lives caused by an earthquake and a super typhoon has run up to the billions.

He mentioned a huge investment that signified the increased confidence by foreign investors.

“We are excited about the incoming $5B investment of the Dubai-based Kampac Group headed by Mr. Charles Ampofo,” he said.

Kampac will be building an “Energy City” in South Luzon, which is estimated to employ between 8,000 and 10,000. It is a strategic project that should be able to help build fuel reserves.

He also noted the renewed interest especially among the Japanese in Philippine manufacturing.

“ This was made possible because the Japanese wants to have a more diversified production base and given the high tension between Japan and China and the high rising cost of living in China, Indonesia and Thailand,”

As an aid to inviting more big ticket investments, Varela cited the launching of industry roadmaps which envisions globally competitive manufacturing industry with strong forward and backward linkages.

The resulting globally-competitive manufacturing industries would increase industry contribution to 30 percent of total value added and 15 percent of total employment.

“Supported by a strong parts and components sector and inputs from productive agriculture sector as well as well managed supply chains, our country is expected to play a vital role in the regional and international production networks of companies engaged in automotive, electronics, garments and good,” he said.

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