Here’s an excerpt from the article:
Whisper it if you will, but the Philippines may at last be getting its act together. These are early days. But there are definite signs that the country – with its young population of nearly 100 million people, the world’s 12th largest – has turned a corner.
First, the external position has improved dramatically. The Philippines, after years of indebtedness, is a net creditor. Overseas remittances from the roughly eight million Filipinos working abroad have steadily added to foreign exchange reserves. At nearly US$80 billion, these are higher than the external debt. Since 2004, remittances have grown from US$7 billion-US$8 billion to US$20 billion, nearly 10 per cent of GDP. The fact that so many people need to work abroad is a sign of the economy’s inability to generate enough jobs. But remittances are serving a purpose and have held up well since the financial crisis. The Philippines is emerging as a solution to the labour shortages of mature economies the world over.
Some jobs go the other way. Philippine call centres have grown exponentially, trumping those in India. Revenues from back office businesses have quintupled over six years from US$2 billion to US$11 billion.
Third, the political situation is vastly improved. Benigno “Noynoy” Aquino, elected President in 2010, has made a creditable start. For one, his government has sent out a strong message that it will not tolerate corruption (a distinct change from past governments, which actively encouraged it). Mr Aquino has instructed tax officials to go after evaders. A few big scalps appear to be doing the trick. The tax take has edged up even without necessary tax reform. The supreme court this week ruled that the huge sugar plantation belonging to Mr Aquino’s family must be redistributed among tenant farmers. The fact that a sitting President can be stripped of land is a hopeful sign that the separation of powers enshrined in the constitution is being honored.
The Aquino government has also taken steps to restore rice self-sufficiency after the country was forced to import a fifth of its needs in 2008. It has established public-private partnerships to build the roads, railways and power stations that have failed to keep pace with an exploding population. Progress has been slow, but the legal regime is considered solid. Many economists are predicting a private investment boom, predicated on favorable demographics – half of Filipinos are under 25 – and the healthiest banking system in South-east Asia.
But that view lags behind reality. In 2010, the economy grew at 7.6 per cent – faster than Indonesia, Asia’s investment darling. Growth has slowed, but it has cleared 4-5 per cent every year since 2006, apart from in post-Lehman 2009. Markets have not been oblivious. Last year, the Philippines stock market was the world’s seventh-best performing. In the year to date, the Philippine exchange is up more than 20 per cent, among the world’s top 10 performers.
So why not invest in the Philippines?