Aquino faces tough economics test

MANILA, Philippines - President-elect Benigno Aquino has an economics degree but he will need a lot more than that to solve the problems that have turned workers into the Philippines' most famous export.

Addressing the Filipino diaspora, Aquino made an ambitious promise in his campaign platform that if elected, he would "create jobs at home so that working abroad will be out of choice, not necessity".

An estimated nine million Filipinos -- maids, bankers, seamen, doctors, nurses, construction workers, drivers, teachers, cooks, engineers, farmers, musicians, air crew, nightclub hostesses -- work overseas.

Accounting for about 10% of the population, overseas workers sent home $17.3 billion in 2009, up 5.6% from a year ago despite the global recession and accounting for 10.8% of gross domestic product.

While acknowledging the economic benefits of having millions of hard-currency earners abroad, Aquino said the exodus caused social problems such as separated families and abuses against workers.

He rejected the promotion of overseas employment as a development strategy and promised to look for "sustainable alternatives" for jobseekers.

It won't be easy to stem the outflow.

With unemployment at 7.3% and underemployment at 19.7%, there are simply not enough domestic jobs in one of Asia's most underachieving economies to go around.

Thousands queue at employment agencies everyday to look for jobs abroad, many going into debt just to pay for recruiters' fees and travel costs.

Promises

Aquino, 50, was elected in Monday's elections on a reformist platform of fighting corruption and reducing the grinding poverty that afflicts a third of the country's 90 million people.

He has vowed to boost foreign investment, implement budget discipline, improve the civil service and invest in education.

For growth, Aquino said he would tap agriculture, business process outsourcing (call centres and outsourced office work), creative industries, infrastructure, manufacturing, logistics, mining and tourism.

The economy is forecast to grow 2.6% to 3.6% this year, up from 0.9% in 2009 but down from 3.8% in 2008 and 7.1% in 2007.

Without the overseas workers' contributions, growth would have been tougher and domestic unemployment would have been much higher.

World Bank country director for the Philippines Bert Hofman said overseas workers' remittances have underpinned macroeconomic stability, keeping the currency steady and building up reserves.

"The bottleneck for the Philippines seems to be in the creation of opportunities for deploying these financial resources at home -- the investment climate," he said in February.

Foreign investors cite corruption, inconsistent regulations, crumbling facilities, and a weak civil service as disincentives for them to put money in the Philippines -- issues Aquino vows to address.

Six year-term

Hofman said the economy's average growth of almost 5% in the past decade has not been enough to make a serious dent on poverty, suggesting Manila will need seven to 8% growth per year to make appreciable progress.

"At current growth rates, the Philippines would be as rich as today's China in 25 years," Hofman said.

Aquino earned a bachelor's degree in economics in 1981 from the elite Ateneo de Manila University, where one of his professors was to be later known as President Gloria Arroyo.

Arroyo is set to hand over power to her former student on June 30 after having served since 2001 -- the first 3 years as successor of ousted president Joseph Estrada and then her own 6-year term.

There is little love lost between the two, and Aquino hopes to do a better job at the economy in the next 6 years than his former mentor did in 9.

"There was so much opportunity. She had in effect practically two terms," Aquino said in an interview with AFP on Tuesday.

"She could have brought significant changes to this country but she chose to advance her personal interests, and those who were supporting her personal interests, to the detriment of the country," he said, referring to the corruption scandals during Arroyo's administration.