Showcasing the Philippines

PHILIPPINES - In Brief 23 May 2014 by Romeo Bernardo

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This week, the Philippines hosted this year's World Economic Forum for East Asia to much fanfare and self-congratulating back patting. The event could not have come at a better time with the country boasting of a 7.2% GDP growth last year, "next only to China", and the S&P just the other week vouching for the sovereign credit with another investment-grade rating upgrade. Still, there is no escaping the main takeaway from the discussions, echoing what we have repeatedly said, which is that Philippine growth cannot be sustained at around 7% without substantially more investments in infrastructure. Indeed, news coverage of the event ran side by side with a stream of stories about rotating blackouts and insufficient power reserves in the three main grids. Discussions also inevitably included the 2015 ASEAN Economic Community (AEC), where the main conclusion confirmed our observation ("Giddyap!, 13 February 2014) that nothing dramatic will happen in 2015 as trade-in-goods have mostly been liberalized while there has yet to be agreements on ground rules for opening up trade in services. As a forum for strengthening regional relations and promoting business ties, the event was highlighted by the presence of the heads of state of Indonesia and Vietnam and spoiled by the absence of a delegation from China, which the Philippines hauled to international arbitration court a few months back. (The Philippines and Indonesia just signed an agreement demarcating maritime boundary between the two nations.).