'Aquinomics' by the numbers

By Coco Alcuaz, ANC

Posted at Jul 25 2011 09:38 AM | Updated as of Jul 27 2011 09:43 PM

The word "Aquinomics" has gained some popularity among people who think and talk economy, business and finance since former Economic Planning Secretary Cielito Habito used it in an opinion article last month. He said it’s two things: the rise in total private investment even as foreign investment and government spending drop, and (related to the drop in government spending) fiscal responsibility. Here are those and and other numbers at a glance.


This is foreign investment in factories and businesses, as opposed to so-called ``hot money’’ investment in stocks and bonds. It’s down 15 percent in the first five months of the year, from $650 million to $552 million.
The Philippines has lagged its neighbors here long before President Aquino. Last year’s numbers are typical, with the Philippines in the poorer side of the ``neighborhood.’’

Net FDI in Southeast Asia (2010)
Singapore         $38.6 b

Indonesia         $12.7 b
Malaysia           $8.6 b
Viet Nam          $6.9 b (2009)
Thailand           $6.7 b

Philippines      $1.7 b
Myanmar          $958 m
Cambodia       $801 m
Laos                 $394 m

On the other hand, total private investment climbed 37 percent year-on-year. For all of last year, it was up 16 percent. That means local investors are more than making up for foreign investors.
Totals of P539 billion ($12.7 billion) for the first quarter and P1.8 trillion ($42 billion) for last year take the some of the sting out of the FDI numbers.
As John Forbes, advisor of the American Chamber of Commerce said last week: ``The perception of the Philippines hasn’t changed yet. We're close to it here and we see the efforts our Filipino partners in the public and private sectors to change things. But I don’t see the foreign investors except in some sectors like BPO (business process outsourcing) coming in fast enough, as fast as we would like. We're disappointed the rest of the world isn’t catching up.''

Now that BPOs have been brought up, here’s how it stacks up against the nation’s two other dollar-earners. While export and remittance growth has slowed, BPO growth is probably close to last year’s.

2010 Dollar Earners
Exports                                               $51.4 billion   +34% (Jan.-May 2011 growth is 7.5%)
Overseas Filipino remittances      $18.8 billion    +8.2% (Jan.-May 2011 growth is 6.2%)
BPO                                                    $9 billion          +25%


Government spending dropped in the first five months. Officials highlight the contribution of lower interest rates. That’s a result from the flow of funds to emerging markets, renewed confidence in the country and debt rating upgrades, probably in that order.
But all other spending fell too, which may be the result of cleaner and therefore lower-priced contracts and/or delayed spending resulting from closer scrutiny of contracts. While that’s good in itself, it can also mean less fuel for the economy.

Government Spending (Jan.-May)
Non-interest spending      P473 b         -10%
Interest spending               P118 b         -14%
Total spending                    P591 b         -11%


GDP growth did slow to 4.9 percent in the first quarter but 2011 was always going to be slower than 2010 when there was election spending and pent-up demand following the global recession.


Revenue has climbed 16 percent in the first five months even if economic growth was just 4.9 percent in the first quarter. As Fitch said when it upgraded the country’s debt rating, "this may point to some early success’’ in the government’s anti-tax evasion drive.

The figures for the Bureaus of Internal Revenue and Customs (the government’s two biggest sources of income) are based on their actual operations, stripping out payments from other government agencies such as the Bureau of the Treasury and the National Food Authority.  Customs Commissioner Lito Alvarez is reported to be on his way out.

Government Revenue (Jan.-May)
BIR      P376 b      +15%
BOC    P105 b      +14%
Total    P581 b      +16%
(BIR figures corrected. Earlier version had smaller growth rate.)

Lower spending and higher revenue have resulted in a whopping drop in the five-month budget deficit from P162.1 billion pesos to P9.5 billion. Yes, that’s right, P9.5 billion. The full-year target is P300 billion, which tells you either their projections were way off, or they’re spending way too little, and probably not just because of cleaner contracts and lower interest rates.

The government said at least 10 Public-Private Partnership projects would be bid out this year. When none had been bid out by April, Finance Secretary Purisima said: ``We assure everyone that it's on track. We're confident we will have 10 in a state ready for bidding and several completely done and then next year at least 10 more, in fact, maybe more.''
So far, one is on track, the Daang Hari-SLEX, with final bidding targeted for December. At 4 kilometers, it’s one of the smallest in the government's list for the year.

PPP Projects for 2010 Roll-Out

MRT-LRT extension          P70-B
NLEX-SLEX connector     P21-B
LRT 2 extension                P11.3-B
NAIA Expressway              P10.6-B
CALA Expressway             P10.5-B
MRT-LRT1 contract           P7.7-B
Bohol airport                       P7.6-B
Puerto Princesa airport    P4.4-B
Legazpi airport                   P3.2-B
Daang Hari-SLEX              P1.6-B
Laguindingan airport        P1.5-B

(Sources: National Statistical Coordination Board, Bangko Sentral ng Pilipinas, Asian Development Bank, Bureau of the Treasury, Public-Private Partnership Center, National Statistics Office, Business Processing Association of the Philippines, Bureau of Internal Revenue)