The title of today’s Inquirer.net editorial Excess money says it all. There is enough money swirling around in the domestic economy to fund significant capital expansion. Big Philippine banks manage a big chunk of these funds. Trouble is, as the Inquirer editor observes, “banks choose to park these funds at the Bangko Sentral ng Pilipinas [BSP, the Philippines’ Central Bank] than risk lending them…”
To be fair, part of the problem has to do with the continued excessive proliferation of high-yield low-risk securities in the Philippines. One culprit identified are these so-called special deposit accounts (SDAs)…
The reason banks put as much money as they can in SDAs is that the central bank pays a high rate on these deposits. The SDA facility was introduced in November 1998 as a tool for the BSP to manage liquidity, specifically the amount of money circulating in the system that affects inflation. In April 2007, the BSP expanded access to the facility to siphon excess pesos arising from strong foreign exchange inflows (dollars, when converted to pesos, increase money supply and pose inflationary risk). Interest rates on SDAs were then set at a high-enough level of about 6 percent to attract funds.
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The obvious next steps, as described by Mr Editor is to restrict inflow of funds into SDAs to encourage banks to, instead, lend excess funds to businesses which, as the theory goes, should “generate jobs.” The point here is that this is one aspect of an internal domestic dynamic that significantly affects Filipinos’ inclination to invest domestically. How many more solutions to induce indigenous domestic investment are lying under people’s noses waiting to be discovered?
Trouble is, the drums beating to cheer on the loser-mentality notion of attracting foreign capital in the form of “foreign direct investment” into the country as the be-all-end-all solution to Filipino wretchedness rings louder in the ears of the country’s lazy “thinkers”. The value of capital trapped in SDAs — two trillion pesos, according to Mr Inquirer Editor — is astounding. That’s fifty billion US dollars in investible funds just cowering away from the lucrative albeit Wild Wild West business landscape of the Philippines. That number is double the total amount of FDI reportedly attracted by the Philippines from 2000 to 2011.
To be fair, however, the BSP originally set up SDAs to mitigate the inflationary effects of excess funds entering the economy, much of which is accounted for by that quintessentially Filipino source of pocket money — overseas foreign wokers’ (OFW) remittances. Too much money circulating in the country — specially money that ultimately ends up in Henry Sy’s pockets — can cause upward pressure on the price of pagpag (a native Filipino dish), you see.
So while restricting banks’ use of SDAs to park excess money sounds like the obvious solution to lackluster domestic investment, all roads still lead to that singular roadblock to sustainable Philippine prosperity: Filipino culture, which predisposes Filipinos to piss away windfalls of cash on non-durable stuff (cellphone load, fiestas, Fred Perry shirts, Chinese-made trinkets, etc.) rather than on durable capital-building things and projects.
Indeed, most likely recognising this, Shanaka Peiris of the International Monetary Fund (IMF) warns how crucial it is that “funds be used for direct investments, especially in manufacturing and other industries, and not for buying stocks or making speculative investments in real estate.” He should add to that consideration for the way OFW families treat their relatives toiling away in desert kingdoms like piggybanks. Recall that the Philippines has among the lowest savings rates in the thrifty Far East. All of that OFW cash hasn’t been turned into factories, longer-lasting lightbulbs and other capital goods and artifacts, or at the very least, deposited in savings accounts. All that dough was likely spent on booze, Hong Kong holidays, iPhones, Samsung Galaxies, Internet time spent on chatting, trolling and camwhoring, and on long-distance phone calls to their overseas relatives to follow-up their remittance cheques.
The BIG assumption underpinning all this “debate” is that more money will necessarily spell a better future for Filipinos. We assume that money in the hands of Filipinos will be well-spent. Has anyone ever questioned this BIG assumption? Seeing it from that perspective, the issue of whether said money comes from overseas or from within simply becomes a non-issue and brings to light the question of how sound this assumption is.
[Photo courtesy Pinoy-OFW.com.]
benign0 is the Webmaster of GetRealPhilippines.com.
If true, this is staggering.
Now the thing is, are these chunks of capital belonging to a highly diversified depositor base? If so, what is the best way to turn the blocks of funds into financing instruments for business?
What seems to be the obvious answer is the local stock market, but no, not really. The listed companies tend to be either old and mature — and may not really need capital infusion as I haven’t really seen strategic expansion. The others are highly speculative, such as mining companies.
An exciting area of investment is the startup community – whether technology or otherwise. HOWEVER, do note that investing in this sector is highly speculative.
I’m sure some smart dude out there can engineer investment funds that target specific securities at varying levels of risk.
Still, the regulatory landscape is both overregulated and lacking in key regulations (and/or enforcement). Thus, it’s very tricky to invest other people’s money in the kind of businesses that lead to exciting growth.
Still, it’s heartening/shocking/scary/exciting to know that there’s a lot of money RIGHT HERE, for the entrepreneurs to court. They may just have to work around the banks.
“James Henry, a former McKinsey & Co. chief economist who now
works with the Tax Justice Network, a non-government organization campaigning against tax havens, estimated that the stock of flight capital out of the Philippines reached $97 billion as of 2010. That is more than the country’s external debt of only $60 billion that year as estimated by the Bangko Sentral ng Pilipinas.”
PCIJ 10 may 2013
It is also equivalent to 2 years govt budget.
So easy to see why no inward investment/infrastructure projects or industry recapitalisation.
When added to the 30% + skimmed from the budget for intelligence funds, pork barrel, commissions, bribes etc then it doesn’t take a rocket scientist to see that the money is there but only shared amongst the few, who clearly have a view that ‘ enough is never enough’.
More money = more opportunities to waste money.
If Filipinos don’t spend (and save) wisely what they currently have, what makes one think they will spend and save any wiser when they get more of it?
This reality simply goes inside one ear, and out the other, of some our society’s supposed “thinkers” and “solution finders”.
The business principle employed in the philippines is generally one of short term gains resulting in an extractive economy where there is not the confidence to reinvest nationally.
Part of that may be explained by past political uncertainties, and the same was/is evident in other countries e.g russia.
It also partly explains the constant resistance to economic charter change, which currently means foreign companies provide capital/risk but without full operational/fiscal control.
This worked for global brands who wanted a presence and take a long term view, although even they are getting weary of the philippines, but lower down the pyramid the mindset is entirely different, and the ‘cost’ of govt to acquire such investments is also now higher resulting in a decline in FDI, and without a corresponding change in govt strategy/approach to entice potential investors, who now flock to the other ASEAN countries who have more sophisticated marketing initiatives and financial incentives, and often better returns on investment.
The result is a foregone conclusion and was very predictable.
Exclusive ownership, shipping profits abroad will never result in inclusive growth or job generation.
As the family jewels are sold/become depleted then without restocking the cupboard eventually it becomes bare
“This worked for global brands who wanted a presence and take a long term view, although even they are getting weary of the philippines…”
Most of the manufacturing jobs that global brands brought to the Philippines moved out nearly fifteen years ago. Johnson and Johnson, Procter and Gamble, Unilever all moved their manufacturing to Thailand, Vietnam and China. Where once the labels on the products made by these companies read “Made in the Philippines,” they now read “Made in Thailand.” Not only does this mean investments are flowing to our regional neighbors, it also means that the money that was once coming into the Philippines has been moving OUT for years. Excellent for the multinationals’ long term regional investments; not so great for the local economy. To be fair, a lot of the regional managers those companies assigned to run their Asian operations come from the Philippines.
And come ASEAN 2015, how on earth will the Philippines compete with other ASEAN nations with the country’s current economic policies.
Lots of money? Most of it probably passes through the shadow economy that Ben Kritz talked about in Manila Times.
Lemme add, before you say “Benign0 is against FDI…” nowhere in the article does he say we don’t need FDI. FDI is good! We certainly need it at this point. Question is, are we of the mentality that we can use it properly? Financial history of the country says it. And… look at Filipino lotto winners. How do they handle their “blessings from heaven?”
Indeed, FDI is good when a people are enterprising enough to recapitalize a big enough chunk of what they gain economically from said capital. There is no arguing against the reality that more jobs will surely come out of projects funded by foreign capital. But the question is, will the income from those jobs go on to fund more capital expansion? Or will it simply go to consumption? If it is more of the latter, guess what: MORE foreign capital will be needed to fund the needed capital expansion that domestic investment fails to fund because Pinoys preferred to spend their dough on buying unnecessary imported goods instead of reinvesting these in businesses or at least depositing them in banks.
What you said here resonates what I had previously said about how we think about poverty and the solutions proposed.
There’s a thinking that poverty is the lack of money and so think that with more money, people will not be poor anymore.
But what really keeps people poor is the lack of know-how in using money to get out of poverty.
Best example, really, is the guy here in PH who won the 200 million peso jackpot of the Megalotto. They guy was suddenly rich and after a year, became poor again — much poorer than he was before he won the lotto.
Why is that?
Well, he squandered it and didn’t put that money into productive use.
Same thing happens in mining towns here in PH.
Big money comes in and everybody is rich. Then mining shuts down, everybody is poor.
FDI flows are only going to do good if it is used by our people to create MORE value through its productive use.
What you guys fail to understand is that culture is NOT static. Yes, the current culture among Pinoys is spendthrifty. But you guys fail to understand the fact that this spendthrift culture developed as a result of the OFW phenomenon. Bringing in FDIs to create jobs is a means to annihilate the OFW phenomenon.
Good rebuttal Kristian. And besides, private investments whether in the form of domestically sourced ones or FDIs are desirable in any economy. The expansion of capital is achieved not only through domestic investments, more importantly, FDIs have a multiplier effect of stimulating the business community through knowledge of how capital is generated and is recycled back into the economy. Why do we single out the Philippines as a country not able to take advantage of the merits of FDIs inflows? Our experience thus far, with limited FDIs has not been all that encouraging and it is the same experience even with enterprising Chinese who would not have been able to grow their economy without FDIs. Many countries have shown that despite their people’s talent in business start-ups, they still needed FDIs to stimulate their economy leading to capital expansion!
The only major infrastucture project/investment will be clark airport ( refurbishment/expansion) and high speed link to manila and extension to tarlac.
Uncle cojuangco and his new airline wants it and now the mid-term election is over then full steam ahead, and hacienda luisita will also move into another gear.
it is SAD that Filipino’s will not prosper even when peso’s are available for investment.
The price of GAS, the price of electricity NEGATE almost all profitable investments fro the average pinoy.
A taxi-cab investment is stunted by high cost gas/fuel. Any type of factory is stunted for the price of electricity is the highest in the world and both are speculated on daily to produce the highest price possible and then lets not forget the TAXES on both those items is EXCESSIVE/OUTRAGEOUS.
So while calling the Filipino at home:lazy, un-motivated, boozers etc..
Can anyone blame them? The Gov’t. taxes the profit out of every single viable option the average Filipino has to get ahead or, more like it, just stay in business. Cut the tax-burden, cut utility rates in half and there would be a profit for the eager entreprenuer out there, otherwise…just forget the country getting anywhere but down with BANGLADESH!
But some still make it despite these taxes. The Sys SM brand, for instance, and many other companies that have lasted the years?
That’s cause those people are greedy and sold their souls to the devil.
But seriously, I think it has something to do with what they do AFTER taxes.
How much do they spend on gadgets, bags, trinkets, and clothes they do not need? Do they buy new phones because there’s a new model? Because their phone is old? Or because their phone is broken?
For some people, I suggest placing their money in stocks because in my case, it fulfills my urge to spend money, gives me a high similar to gambling, gives me (sometimes) an alternative source of income.
I used to shop at the SM but not anymore, leave that to the rich and shameless, tourist and other misc fools.
VAT Tax, never noticed just how much tax was getting collected till a couple of years ago when I brought home my groceries, not much to show for $400 of spending only to find out that my VAT tax took up half the bill, I think the VAT has eased up or they came up with certain items VAT free or VAT discounts on certain products.
It is very easy to circulate False Press Releases; especially from the YellowTard Press, to spin peoples’ mind. That they are in the era of Aquino prosperity.
Unfortunately, there are still people with eyes and brains; with some common senses left in their heads.
Infaltion is running wild in the Philippines. Soon, it will like in the Aquino KALIBAPI Japanese era. Where the occupying Japanese goverment , printed “Mickey Mouse” Philippine currency. To buy a ganta of rice. It cost 5,000 pesos of Japanese money – a “bayongful” of currency…
I don’t feel it matters who’s in charge, I used to buy into the Yellow team past but? They don’t own everybody here, it’s an everybody issue and I hope the peso keeps on dropping and way overdue, should be at 50 peso’s-$1 just like all Pnoy’s think it is and it should be, I look at the garbage 42 peso’s can buy and I’m getting ripped off.
How can a Filipino save money if his income’s not enough to feed his family 3 square meals a day? They keep talking about saving like there’s excess money to save. These OFW’s don’t earn much, most earn just 20-30 thousand pesos a month, and minus living expenses on said countries, that’s barely even enough to put one kid through college.
Most OFW’s are investing through education. Putting their kids through school is better than letting cash sit in a bank. This article is ignorant, stupid and insulting, the author is some well-to-do moron who isn’t living in the same impoverish mess the rest of us are.
Agree. The ordinary employee, which comprises the bulk of working Filipinos, does not earn much to be able to set aside something for the so-called “rainy days.” What they earn is only enough to tide them over till the next payday. But most of the time, they even have to resort to usurious moneylenders for other big financial requirements of the family that cannot be addressed by their salaries. Personally, I guess, the right way to address this economic constraints of the Filipino is to allow foreign investors to come in and compete with our native oligarchs to widen the economic opportunities of the ordinary Filipino wage-earner.
@Fabulous, you are correct.
the present business climate in the country is such that ‘local’ business’s(inter-changeable term:political dynasty) have a monopolistic hold on the local economy. it is not in the interests of the richest in the country to allow any type of ‘foreign’ investors to come in and challenge the indigenous business’s for fear of losing their monopoly. OR to allow local competition to thrive, for the same reason.
do not let the idiotic comments made to you about “if Filipino’s don’t trust the local economy, foreign investors won’t either” because, as you stated: the average Filipino can not invest anyway.
instead of concentrating on looking at the avg. Filipino a focus should be put on what hampers a competitive business investment by an average Filipino? an industrious venture into say, dress-making is stunted before it even can get started because of banks being un-willing to speculate on the viability of such a venture because: the imported sewing machines needed are too expensive to purchase (cut the tariff, yes?), the electricity to run an enterprise that is dependent on electricity can’t compete w/other ASEAN countries because of the price gauging/speculating going on in the energy sector (which is openly bragged about by the speculators!and is 300% higher than neighboring Thailand).and then ,finally, the venture is further doomed before it can even start because of the greed of the landlords who would be leasing a suitable space to house/operate a ‘dress-making’ venture. these are the same problems that exist for every single eager entrepreneur in the country and until it is recognized by those at the top as a national disgrace that needs to be addressed and subsidies granted to ‘start-up’ enterprises such as the fictional ‘dress-making’ example illustrated above (same goes for the ‘foreign’ investor that can easily avoid the country altogether and go to a more ‘business friendly’ ASEAN state)…nothing will be changed in terms of people being able to afford to engage in ‘local’ enterprises that are needed to propel the Filippine society to at least equal its ASEAN neighbor’s. it is truly a disgrace that the Philippines is closer to Bangladesh, in terms of personal quality of life, than Singapore.
AND,it is not an accident.
Good rebuttal to Mr. Johnny Saint’s argument below. It really is pointless to belabor the point that we need to revise the constitution to allow more FDIs to come in: it is clear as daylight, we need FDIs inflows badly. I see this more pressingly in the energy sector. If only we let the German companies come in and build the grid for solar power generation in our country, our energy crisis will be solved. It has been said time and time again that it is cheaper for this alternative power source to be built in a country like ours where the grid has not been constructed fully in all areas of the country. But with
the constitutional restrictions on foreign investments, we are left at the mercy of the oligarchs. Kudos to the clarity of your arguments Gerry!
Vincent, fabulous,
Did you actually read the article? Did you comprehend it? There are two salient points that you should focus on.
First, there is some TWO TRILLION PESOS — up to US$48 billion — parked with the BSP in the form of SDA accounts. This money comes from anyone — the so-called elite, the middle class, OFWs — who has some amount of disposable income or savings and are looking to invest in a short term placement that pays better than the regular deposit accounts. We aren’t talking about day laborers or casual workers at the low end of the employment spectrum who borrow heavily for their daily consumption needs. That much money sitting idly with the BSP is alarming. While originally used to mop up excess liquidity in the economy, it was expected that the money would then be used to invest in the local economy — local enterprises or even the local equities market. But that hasn’t happened. Instead, those with cash to spare are keeping their money in SDAs — considered a safe and virtually risk-free investment — even as the interest rates drop to below 3 percent. That suggests that local investors would rather let the BSP have their money for safekeeping at an interest rate lower than inflation because they still do not trust the investment climate. That further suggests that local investors do not trust the Aquino government enough to invest in some venture in the real economy or at least in the stock market. That Filipino investors will not invest in the local economy throws up a red flag for foreign investors. Why will they invest in the Philippines, over say, Vietnam or Thailand, if Filipinos do not have faith in the local economy?
The second item the article highlights is that Filipino OFWs have very poor financial habits. Financial education for OFWs is badly needed. According to the Commission on Filipinos Overseas, out of the US$22 billion 2012 remittances, only 6.8% was used for investments. 46% goes to debt repayment. The rest goes to expenses, including basic needs, consumer spending, including the purchase of high-end luxury items, and savings. Remittances need to be funneled into more productive investments rather than letting it simply fuel the consumer bubble. If more effort were exerted in educating OFWs in financial management, you would break the endless cycle of OFWs having to take on new contracts just to maintain a subsistence level existence once the money they earned overseas runs out. And it would give the OFW children other alternatives in the Philippines other than the ambition to work abroad or emigrate like their parents after graduating.
“46% goes to debt repayment. The rest goes to expenses, including basic needs, consumer spending, including the purchase of high-end luxury items, and savings.”
There’s nothing wrong with my comprehension, thank you very much.
So you’re implying there’s something wrong with paying off debts? Paying for basic needs? Just how much of the percentage there goes to what YOU consider “luxury” items? And just how much percentage should YOU think the Filipino spend on them?
Give that OFW’s work abroad for years on end, away from their family, they have the RIGHT to buy a little “luxury” item. If the spending is excessive, like maybe over 50% of their income, hey, then maybe you have a point, but given the statistics you gave, OFW’s are working their asses of just to be able to SURVIVE.
“the so-called elite, the middle class, OFWs — who has some amount of disposable income or savings and are looking to invest in a short term placement”
Ok FIRST the article says, that the problem with Filipinos is that they DON’T save, and now you’re eyeing the money of what’s left of the Filipino middle class that DID save and you’re arguing that they should SPEND it? HUH? You don’t make sense.
Also, what they do with their money is their business, the money you’re talking about was probably saved from years of work, it’s not something that comes in YEARLY, that’s an accumulative amount, and not something you get every paycheck.
In attracting foreign direct investments, the country can have SUSTAINED expected capital flowing in from foreign corporations, that will in turn provide jobs for the local populace AND increase their disposable income.
With more disposable income, Filipinos can begin to save for their future.
Filipinos are lazy, Filipinos can live and be hard working citizens in other countries, the here is that they can’t work locally because THERE ARE NO JOBS.
Read about the impact of foreign investments on developing countries here:
https://mises.org/daily/6309/Foreign-Investment
The only thing the article proves, is that the author is some arrogant snot, who is not living in the same eco-system as the people he’s criticizing, who are just trying to survive. He’s probably some OFW himself, pretending to be a foreigner working some decent paying job in a country that very likely FAVORS foreign direct investments.
Filipinos are NOT Lazy” why no edit button?
I run into these OFW’s that buy luxury items such as a brand new SUV, they look pretty rich as they drive and park it at the grocery store and then come out with a full family and a tiny package of food, lol.
Living like a big shot has its downers and wasting your money on junk that will eventually break down and not business is the normal, showing up the neighbor is an everyday event and then back to work and debauchery with other women in another country… you guys tell the family your return date but it’s actually a week earlier because when your return to the Philippine you give yourself a full week of more debauchery.
Apparently, Vincent, you have very poor comprehension. And it’s colored by your personal bias against the article’s author. There’s just no call to degenerate into name calling.
First off, you are completely disregarding the main point of the post. There is up to $48 billion parked with the BSP. Money that is not being used for investment in the real economy. Regardless of what political slant you or Miriam Quiamco or Gerry may have, the fact is THERE IS MONEY AVAILABLE for investing locally that does not have to come from FDI sources. NONE of your posts deny this; they merely sidestep the issue and cite a litany of excuses as to why people should not invest and pray, instead, for FDIs. That is counterproductive.
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“So you’re implying there’s something wrong with paying off debts? Paying for basic needs? Just how much of the percentage there goes to what YOU consider ‘luxury’ items? And just how much percentage should YOU think the Filipino spend on them?”
That is a stupid assertion.
Read my comment again. There is nothing in the post that suggests debt repayment is “wrong.” Nor am I attempting to dictate how people should spend their money. The data on OFW finances come from the Commission on Filipinos Overseas. 46% of remittances is allocated for debt repayment; that is a statement of fact. 6.8% ends up being invested. The rest is used for consumption — both for basic needs and luxury purchases. That isn’t an opinion either. It’s been documented for years, by organizations such as the Asian Development Bank, that OFWs spend a lot of their remittances on “conspicuous consumption” including transportation and mobile phone communications as benign0 detailed in the above article.
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“Ok FIRST the article says, that the problem with Filipinos is that they DON’T save, and now you’re eyeing the money of what’s left of the Filipino middle class that DID save and you’re arguing that they should SPEND it? HUH? You don’t make sense.”
Again, you fail to comprehend the simple idea here. You are confusing the issues and jumping to stupid conclusions.
The difference is in consumer spending (which is the trend among the middle class, including OFWs) versus investing in the real economy. I mentioned, as benign0’s original post did, that the money in the BSP IS EXTRA DISPOSABLE INCOME AND/OR SAVINGS that Filipinos have parked there. That isn’t money that you would normally allocate for daily subsistence spending. As cited in the original Inquirer op ed piece, the IMF suggests the money would better serve the Philippines if it were put to use in job-generating investments instead of your insistence that everyone stand around waiting for FDIs. This is the real problem — that locals with money available to invest in the real economy ARE NOT INVESTING.
“With more disposable income, Filipinos can begin to save for their future.
“Filipinos are lazy, Filipinos can live and be hard working citizens in other countries, the here is that they can’t work locally because THERE ARE NO JOBS.”
Further indication, Vincent, that you failed to understand the article. The SDA money parked in the BSP IS DISPOSABLE INCOME AND/OR SAVINGS. If this money could be channeled into the local REAL economy, there WOULD BE JOBS in the Philippines that actually produced something of value. And this could be done without having to wait for a multinational corporation to tell us that we’ve arrived.
Furthermore, it would give OFW remittance educated children something to look forward to after they graduate. You made a big deal about investing in education. Without a robust, productive economy, the only thing you will create is a new generation of OFWs who have to no choice but to apply their skills outside the country or emigrate because the previous generation (of OFWs) REFUSED to invest their money in local businesses.
There are jobs for skilled workers and college graduates but the same issue with the Philippine citizen is the same is with the Mexican they want to make more money and don’t want to wait for changes to happen they need change now, sadly it hurts both countries when its top players leave country and don’t have the patience to improve their own country. Hard to create jobs when nobody wants to let foreign investors in, the whole 60/40% business investment isn’t gonna work and mom and pop shops with limited funds, that’s what we have now it really sucks.
“There are jobs for skilled workers and college graduates but the same issue with the Philippine citizen is the same is with the Mexican they want to make more money…”
This assertion is erroneous. The implications are that the only reason Filipinos work abroad is the higher pay.
Putting aside the issues of greed and impatience, you should first take a look at the labor situation in the Philippines before posting baseless comments. The fact is the current economy is not producing the required number of jobs that pay real wages and contribute to inclusive growth that help bring people out of poverty.
President Aquino likes to point out that in the Philippines’ most productive sector, the BPO industry will produce some 700,000 employment opportunities in within the next 2-3 years, bringing the total to 1.3 million in 2016. However, the statistics show that we need to generate 1.5 million job opportunities per year to take care of the new entries to the work market and to take care of those who are not busy now, and provision for returning OFWs. There will still be a huge job gap to fill even if BPOs optimistic growth patterns continue.
From a broader perspective, the World Bank (WB) issued a statement at the Philippine Development Forum in Davao that says the Philippines needs to create 14.6 million jobs by 2016 to achieve inclusive and sustainable economic growth. Currently, 10 million Filipinos are under- or unemployed. Of the 1.1 million potential entrants to the labor force each year, only 25 percent find jobs.
The WB further stated that of the half a million college graduates in the Philippines each year, around 240,000 can be absorbed in the formal sector, such as the business process outsourcing sector which can employ around 52,000 graduates a year, and the manufacturing sector which can absorb an estimated 20,000 entrants. Around 200,000 of the college graduates find jobs abroad, and about 60,000 will be unemployed or will exit the labor force. The remaining 600,000 new entrants end up working in the low-skill and low-pay informal sector.
By 2016, it is estimated that, at current rates, around 12.4 million Filipinos would still be unemployed, underemployed, or would have to work in the low-pay informal sector.
The lack of employment opportunities is a documented fact. It isn’t an excuse to cover up impatience or greed.
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“Hard to create jobs when nobody wants to let foreign investors in…”
Why do you keep insisting on the need to rely on foreign capital? Yes, FDIs can be a critical component for growth. They are NOT the ONLY drivers for economic growth. Especially since the picture the BSP presents to us is that there is more than enough money in LOCAL hands (up to $48 billion) to jump start several industries.
What we require is the application of a strategic approach. To start with, the Aquino government needs to implement several reforms: simplifying rules and regulations to encourage the growth of firms of all sizes; enhancing competition in the economy, giving priority to sectors with the greatest potential in generating jobs; securing property rights on land for both rural and urban dwellers; and, yes, creating a level playing field that encourages both local AND foreign investors to participate in the local economy. We won’t solve the country’s economic woes by begging for handouts and throwing that money at the problem in the hope that this will make life better.
The first line of that last paragraph should read “What we require is the application of a strategic approach to encourage Filipinos to invest that $48 billion in the local REAL economy.”