and the winner is...
this bodes well for the government's quest for an investment grade rating, a distinction currently enjoyed by indonesia, another southeast asian country with almost the same features as the philippines - large, youthful population, export dependent, rich natural resources, persistent budget deficits, frequent borrowings in the overseas debt markets.
(in my past life when i was covering asian bonds, investors and analysts would always compare the philippines and indonesia - both the biggest sellers of bonds in the global markets - and some of them would point out that philippine dollar bonds were already trading at investment grade levels, even faring better than indonesian dollar bonds.)
portfolio investments (and hopefully the more permanent foreign direct investments) are expected to pour in like a typhoon as an investment grade rating looms. some fund managers, analysts, strategists are, in fact, betting that the philippines will get an investment grade mark from all top three international debt raters - standard & poor's, moody's and fitch - edging out indonesia, which only had moody's and fitch. s&p still rates indonesia a notch below investment grade, at par with the philippines. and, hear this, it might start happening as early as this year. (i am betting fitch will be the first one to boost manila's debt rating.)
everyone, of course, loves a winner. especially if that winner is someone who has been an underdog for a loooooooooooooooong time. that's why we are getting a chorus of praises from those who matter in the global business scene including a once white house economist. but i am waiting for my favourite pundit (chos) paul krugman to join the greeks. otherwise.
mind you, these are some of the same people who are actually just looking for another place to put their funds and make money after indonesia disappointed and most recently vietnam went bust a tad earlier than everyone had anticipated.
so the philippines it is.
as my former bureau chief at bloomberg manila noted: "the philippines is basking in some kind of pre-investment grade glow." (puwera usog!)
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of course being the darling of the very important but mostly fickle international investors is nothing new. there was a time during the reign of president fidel ramos, whom i covered for a few years when i was a greenhorn in the industry, when everyone was predicting that the philippines would become the next asian tiger, a super mega achievement since the country, long been considered the sick man of asia, was notorious for its economic boom and bust cycles reminiscent of the latin american economies.
before president ramos made the philippines the promising tiger, everyone had given up on the basket case of asia. some prophets of doom even went as far categorizing the philippines as a latin american economy, further scaring off investors who had been burned by mexico's tequila crisis. efforts by president ramos to lure offshore investors including frequent travels abroad to sell the country's new economic paradigm, the liberalization of the banking industry, deregulation of the oil sector by removing government subsidy, the privatization of inefficient companies such as petron, implementation of measures to raise tax collections, changed all that.
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unfortunately, it did not last long.
all that optimism and impressive growth, which enabled the country to briefly experience a rare feat: a budget surplus, disappeared quickly along with the portfolio investments when the asian currency crisis that began in thailand -- forced to depreciate the baht to avert a current account crisis after funds fled the country in droves as its property bubble burst -- spread to the rest of the region, including the then still vulnerable philippines.
even before the country was able to recover from the asian crisis, came the scandal ridden estrada government that further eroded the confidence of investors (both offshore and onshore). what kept the economy floating in those years (and until now) were the remittances from the country's hard working citizens toiling overseas as maids, entertainers, nurses, construction workers, ship workers, seamen. ironically, they are the ones who are hit first every time the country experiences a surge in portfolio capital inflows because it pushes up the value of the peso, resulting in lower peso value of their dollar remittances.
^^^^^^^^^^
will this current boom last? has the philippines learned its lessons from the series of international crises that undermined its growth prospects in the past - the petro dollar crisis, the mexican crisis, asian foreign exchange crisis, housing credit crisis in the united states and most recently the european credit crisis? will the central bank be tempted to put some curbs on the inflows of funds to prevent the flood of speculative or so called hot money from entering the country and wrecking havoc on the exchange rate? will it put more measures to arrest the peso's rise, which is of course harmful to exports (their dollar value rises, making them less competitive abroad, while their revenues fall when converted to pesos. of course, exporters can always hedge. but it's a different story) and lead to lower peso value of remittances by overseas workers? on the upside, a strong peso will help arrest inflationary pressures.
such a difficult job the monetary authorities have, mind you, balancing the tricky trio of inflation, interest rates and exchange rate.
%%%%%%%%
what now?
sorry for being carried away. that's not the reason for this post. god knows that when it comes to
business, financial and economic stuffs, i am retired. double chos.
what i meant to write is this. now that the country is the second best performing economy among emerging markets in the world next only to china (please correct me if i am wrong), will this:
*end the country's thirty nine year drought for a ms. universe title? the last win we had was in nineteen seventy three when margie moran grabbed the title, becoming the second filipina to be crowned the most beautiful woman in the universe after gloria diaz's very impressive finish in nineteen sixty nine, incidentally the year i was born, and when man first landed on the moon.
*help the country finally clinch an entry into oscar's elusive best foreign language category? will brillante mendoza and nora aunor's thy womb finally make it? or vilma santos's ekstra?
*attract more luxury brands to set up branches in the country, or even make the philippines their regional hub, moving out from singapore, hong kong and shanghai?
*keep millions of filipinos from seeking menial jobs overseas? jobs that are so beneath their educational achievements. are we going to see more expats finding jobs in the country for a change? are we going to see some of them clean up our toilets, take care of our kids and even sweep the streets while we shop for designer outfits and scout for investments in milan, paris and new york?
*lead to more hollywood movies shot in the philippines? remember, there was a time when manila was the favourite location for chuck norris films. when it was the stand in for bangkok and vietnam. when francis ford coppola shot one of his best movies to date, apocalypse now, in laguna and other places in luzon (coppola's stay in the country inspired the wealthy but eccentric artiste and wine maker to buy an island somewhere and build nipa huts because he was so inluv with these small houses when he was in the country).
*boost the country's appeal as an alternative, if, not the main financial hub in asia, stealing the limelight from hong kong and singapore?
and finally,
*will this help junessa del bianco vda de dubois finally find an ultra rich husband to finance her retirement from the glamourous world of international financial journalism?
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that's all!
(the photo of the gorgeous ms. gloria diaz was taken from the internet. no copyright infringement intended. pls don't sue the jobless me.)
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