ECONOMY TUMBLES; GOVT WEAK SPENDING BLAMED / NOY TO CHINESE: PHL OPEN FOR BIZ
MANILA, SEPTEMBER 2, 2011 (MANILA TIMES) Written by : Darwin G. Amojelar, Senior Reporter - Weak govt spending partly blamed for poor 3.4% growth
THE Philippine economy fell sharply in the second quarter of the year because of a contraction in the industry sector and weak government spending as global uncertainties could derail growth prospects, officials said on Wednesday.
Romulo Virola, the secretary general of the National Statistical Coordination Board (NSCB), told a briefing that the economy, as measured by gross domestic product (GDP), slowed down to 3.4 percent in the second quarter from "booming" 8.9-percent growth last year.
GDP refers to the total value of goods and services produced in a country in a year.
The second-quarter growth was below the National Economic and Development Authority's forecast of 4.5 percent to 5.5 percent, as well as private analysts' average projection of 4.9 percent, and some international organizations' average outlook of 5 percent.
During the first half of the year, the economy grew by 4 percent, much lower than the government's target of 7 percent to 8 percent this year.
On a seasonally adjusted quarter-to-quarter basis, the economy decelerated to 0.6 percent from a 1.9- percent growth in the previous quarter.
Virola blamed the "less than desirable growth" on the European debt crisis, the devastation experienced by Japan and the fragile recovery of the country's trading partners.
He said that the second-quarter GDP was dragged down by a 3-percent contraction in the industry sector.
The agriculture, hunting, forestry and fishery (AHFF) sector posted 2.2-percent growth in the second quarter, while the service sector recorded a 2.4-percent growth.
Socio-economic Planning Secretary Cayetano Paderanga said that the second-quarter GDP growth was constrained by surges in world oil prices, triple disasters in Japan, slow recovery of the US and European economies, social unrest in the Middle East and North Africa (MENA) region and adverse weather conditions, which negatively affected the fishing sub-sector.
"The second-quarter growth in 2011 was expected to have been lower than the growth in the same period last year due to tapering off of the base effect and the absence this year of growth drivers in the second quarter of 2010, such as election-related spending and the stronger than expected global economic recovery," Paderanga added.
He, however, said that the country's GDP growth is faster than that of Thailand's 2.6 percent and Singapore's 0.9 percent but slower than China's 9.5 percent, Indonesia's 6.5 percent, Vietnam's 5.7 percent and Malaysia's 4 percent.
Benjamin Diokno, Budget secretary during the Estrada administration, said that the 3.4-percent GDP growth during the second quarter was the slowest since President Aquino took power in July 2010.
"Instead of being a source of growth, the government has been a major drag to the economy," Diokno added.
Public construction contracted to 51.2 percent in the second quarter from 37.3-percent decline in the first quarter and 24-percent contraction in the third quarter of 2010.
"The message for the government is clear: It has to act more decisively and move government programs and projects faster," Diokno said.
Because of the huge contraction in public construction, the construction sector fell by 16.1 percent from a growth of 24.7 percent last year.
The NSCB said that the GDP growth in the second quarter should have been 4 percent if the construction sector declined by only 8 percent and 4.5-percent GDP growth if there was zero growth in construction sector.
To attain the 7-percent GDP growth target, Paderanga said, the economy needs to grow by at least 10 percent in the second semester and by11.8 percent in the second semester to meet the high-end target of 8 percent for the year.
"Prospects for the second half of 2011 are better than the first half's performance. Agriculture production will be supported by the strong prospect for palay production. The Bureau of Agriculture Statistics has projected a 6.2-percent growth for palay (unhusked rice) in the second half of 2011," he added.
Paderanga said that public construction and government services are likely to pick up as a result of an accelerated spending plan of government implementing agencies and the Department of Budget and Management for the rest of the year.
"Global downside risks could hamper our growth prospects," he added.
Internally, the NEDA chief said, the Philippines' immediate concerns are delays in public spending, weak industry output and timely recovery from natural calamities.
"Considering the slow growth of the global economy, the possible spillovers of US and Euro zone problems, and a calamity-beaten agriculture sector, the Economic Development Cluster will be prioritizing tangible measures to boost domestic demand, accelerate fiscal spending and take advantage of the benefits of closer integration of fast-growing Asean economies, in order to provide the needed employment opportunities to boost incomes and social welfare," Paderanga added.
These measures include pursuing and accelerating infrastructure projects, diversifying domestic and external trade, sustaining domestic consumption, securing investments and safeguarding price stability and the functioning of financial systems.
"We want to optimize fiscal spending's contribution to growth. As such, the accelerated spending program aims to fast-track government disbursements in the second half of the year, in order to shore up the level of economic activity. For instance, recognizing the low utilization and absorptive capacity of its departments and agencies, the government focused on fast moving expenditures to beef up its spending," Paderanga said.
He added that government spending may most likely reach as high as P240.3 billion, including the internal revenue allotment requirement for the months of September to December, cash grants for Pantawid Pamilyang Pilipino Program and financial assistance to local governments, health services, housing projects and government-owned and -controlled corporations.
Frugal spending Despite the economic slowdown partly brought about by the weak government spending, spokesman Edwin Lacierda said that the government was sticking to its mandate of frugality.
"Despite the gains we have made over the past year, we remain aware of the necessary steps we must take to achieve even more growth. We have been accelerating spending to provide added stimulus to the economy. July 2011, which will be included in the 3rd Quarter GDP Growth assessment, saw us spend P133.45 billion, the highest monthly national government spending figure so far this year," Lacierda added in a statement.
He said that the Aquino administration continues to "spend wisely" for the benefit of the people and to achieve lasting economic stability for the country.
"While we work toward increasing our economic growth, we keep in mind that we are working, ultimately, so that more Filipinos can say that they are no longer hungry, that they finally have decent health care and that they have the opportunity to improve their lot in life, areas in which we have been successful," Lacierda added. With report from Maria Nikka U. Garriga
FROM PHILSTAR
Noy tells Chinese: Phl open for business By Aurea Calica (The Philippine Star) Updated September 01, 2011 12:00 AM
[PHOTO - Philippine President Aquino and Chinese President Hu Jintao inspect honor guards during a welcome ceremony at the Great Hall of the People in Beijing yesterday. AP]
BEIJING – President Aquino yesterday assured Chinese businessmen of a better investment atmosphere in the Philippines as he seeks up to $7 billion worth of investments on his first state visit to China.
Aquino was speaking to officials and business executives at the Philippines-China economic and trade forum here on the first leg of his four-day visit that Manila hopes will result in investments from the world's second-biggest economy for big-ticket infrastructure projects.
"As I have been saying this past year, the Philippines is open for business. The atmosphere has not been this conducive for business in a long time," Aquino told the Chinese businessmen and officials.
"What this simply means is that investors will not anymore have to rely on connections in order to set up shop; the rules will not be circumvented and the law will be followed, creating an environment that is stable and predictable and, therefore, one that is conducive to profit," Aquino said.
He was scheduled to hold talks on Wednesday with Chinese President Hu Jintao and on Thursday with Premier Wen Jiabao.
"In the past our commercial relations have been more beneficial to you than to us," Aquino said. "Now, we have come here to balance the equation."
He welcomed Chinese business and investment, in particular in the tourism, agriculture, and infrastructure sectors.
"Let me declare once again: the Philippines is indeed open for business," he added.
Aquino said that the Philippines will ensure that Chinese businesses are given a "level playing field" as he pledged to instill "a culture of transparency."
"The biggest change between the Philippines under my administration and under the previous government is a change in mindset," he said.
"We will not take short cuts in order to close deals; we will follow the correct procedures," he added.
During Aquino's trip, both Manila and Beijing are likely to touch on a number of sensitive issues including territorial disputes in the West Philippine Sea and Manila's concerns about Filipinos jailed in China.
By 2016, the two sides plan to exceed $60 billion in bilateral trade, China National Radio's website cited China's Vice Premier Wang Qishan as saying.
China is the third-biggest trade partner to the Philippines, with two-way trade of $27.7 billion in 2010, an increase of 35.1 percent from 2009.
The Philippines' oil and gas resources are attractive to resource-hungry China.
Chinese firms, including China's top offshore oil producer, CNOOC, were interested in investing in 15 oil and gas exploration contracts worth at least $7.5 billion.
During his trip, Aquino will visit the commercial city of Shanghai and Xiamen in southeastern Fujian province, where the family of his mother, democracy icon and former President Corazon Aquino, has roots.
He noted that the Philippines is eyeing a longer partnership with China since "the Philippines will be the northern gateway to the region" with the formation of the ASEAN Economic Community by 2015.
The President also stressed the gains were already being felt through improvements in infrastructure, investments and social welfare programs such as education and health.
Aquino thanked the Chinese people for their hospitality in welcoming him on his first state visit and for their interest in the Philippines.
He said this "goes to show that my people's newfound optimism spills over to our neighbors here in China" and which had been attested to by two success stories of Chinese investments in the Philippines.
Chinese businessmen had partnered with the Department of Public Works and Highways for various projects, two of which were expected to be completed in 2013.
Trade and Industry Undersecretary Cristino Panlilio made a presentation before the Filipino and Chinese businessmen on the areas where they could invest.
According to Aquino, the Department of the Interior and Local Government had worked with local officials to harmonize local statutes with national laws to make it easier for businesses to operate, and that various signs of improvement could be seen – the stock market hitting all-time highs and credit ratings upgrades in over a little more than a year, compared to only one upgrade and six downgrades in the previous nine years.
"I encourage you to ride on this wave of optimism. The time to put in place strategic investments in tourism, agriculture, and infrastructure is now. You can seize these various opportunities in the Philippines, including those under our Public Private Partnership program. Also, consider the opportunities in the country's significant competitive advantages: a highly skillful and well-educated workforce, a youthful and large domestic market, and natural endowments for tourism, among others," Aquino said.
"I look forward to welcoming your investments into the Philippines. Let me declare once again: the Philippines is open for business," Aquino reiterated.
Invest in Phl with 'four rights'
Presidential spokesman Edwin Lacierda said President Aquino encouraged business leaders who met with him in China to invest in the Philippines with "four rights" this time – right projects, right cost, right quality and right on time.
Aquino held a meeting with leaders of the State Grid Corporation of China, Energy World Group, China Trend Investments Ltd., LED Chinese Contractors and then Vice Premier Wang Qishan.
Lacierda said the President asked various companies to invest more in the country.
"They're very eager to invest more, in fact, there is one group that will be meeting, hopefully next week, with the various economic managers," he said.
According to Lacierda, there was one firm that complained about bureaucratic red tape.
"The President mentioned that under his administration, he was going to cut down on red tape and he's going to hasten the speed of business registrations and also the business investment climate in the country," Lacierda said.
He said they have yet to ascertain the figures on how much investments could possibly be generated by the state visit.
"The MOUs (memoranda of understanding) are still going to be signed so we will try to see if the figures can be gleaned from the documents," he said.
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