In the late mid-1960s up to 1970, the Philippines was an export powerhouse with export earnings 10 times those of South Korea, Taiwan, and Hong Kong.
By 1981, Hong Kong ($21.8 billion) had 3.8x more exports than the Philippines ($5.72 billion). South Korea ($21.25 billion) had 3.7x more exports than the Philippines, and Taiwan ($22.6 billion), 3.9x.
By 2016, Hong Kong’s exports ($502.5 billion) were 8.9x those of the Philippines’ $56 billion, South Korea ($495.4 billion) 8.8x, and Taiwan ($280.3 billion) 5x.
Why did the Philippines lose the exports war?
Simple answer: Poor and inadequate infra. The country does not have enough good highways, ports and airports to attract tourists and entice investors. Today, out of 85 airports in an archipelago of 7,600 islands, only ten airports have night flying capability.
Outside of the ten night-rated airports, if you land in the 75 remaining airports before 5 pm, you cannot leave the place the same night. You have to check into a hotel (our hotels are very expensive, by the way) and book an overbooked flight the following morning.
With poor infra, the Philippines also missed three waves of foreign investments that flowed into Southeast Asia in the 1980s, 1990s, and 2000s. These investments fueled the economic miracles of Thailand and Malaysia, today, the top two tourist destinations in Asean.
In 2017, Thailand hosted 35.38-million arrivals; Malaysia 25.9 million, and Singapore 17.4 million. In 2015, Thailand (with 29.9-million arrivals) overtook Malaysia (25.72 million) as Asean’s No. 1 tourist destination. Since then, Thailand has never relinquished its tourism leadership.
In the past 10 years, the Philippines has never improved its No. 6 ranking in arrivals among Asean countries. It was No. 6 in 2009 (with three-million arrivals). It was still No. 6 in 2017 (with 6.62 million), an increase of 106 percent. During the same 10 years, Thailand’s arrivals increased from 14.15 million to 35.38 million, an escalation of 150 percent, almost 50 percent faster than the Philippines’.
The lesson then is: When you invest in tourism infrastructure as big as airports, you boost not just tourism. You also boost investments. When the two go together, you have all-around prosperity.
No wonder, the per capita incomes of Thailand in purchasing parity US dollars is $16,070, while Malaysia’s is $26,900, far more than the Philippines’ $9,400 despite this country’s having been previously (until 1970 at least), Southeast Asia’s richest economy.
Thus, the San Miguel airport brings us back to a bygone era of greatness when Filipinos were builders of men, of economies, and of nations. We should think like the Vietnamese. In five years, Vietnam became the biggest rice exporter and biggest coffee exporter. It cut its unemployment to half of ours.
The San Miguel airport has many benefits. They include:
• No-cost government. SMC will finance the whole P735-billion project cost. So taxpayers won’t be burdened with debt servicing. SMC can borrow six times its earnings before interest, taxes, and depreciation. So far, the P1-trillion company (in sales) has borrowed only twice its EBITDA.
• Increase in annual arrivals to 20 million
• Generation of at least 30-million direct jobs. The airport’s job generation can solve the country’s unemployment in about three years (supposedly there are only 2.2-million unemployed Filipinos. At P2 million per job, providing jobs to 2.2-million jobless will cost P4.4 trillion).
• Decongestion of Metro Manila. Traffic in the capital costs taxpayers P3 billion a year.
• Improvement of the image of the Philippines
• Improvement Filipinos’ quality of life
• Contribution of more than 8 percent of the country’s GDP or the total production of goods and services by the economy. At P17 billion, 8 percent is P1.36 trillion per year.
• Addition of one percentage point rate to the GDP growth rate. If the economy grows normally at 7 percent per year, growth with a new airport will be 8 percent.
• Fast and easy access via multiple expressways
• Substantial multiplier effects
• A drastic cut in cost of air travel. A one-hour flight in the Philippines is about $300; in Vietnam it’s $50; in Europe it’s 60 euros.
• Cut in cargo cost by 90 percent, from $10 per kilo to $1. Electronics requires just in time assembly and delivery which an airport can provide.
• Revitalization of industry to make the Philippines an export powerhouse again (electronics and transport parts are our No. 1 export).
• Generation of P2 trillion, if the 625 hectares of old Naia are sold as a real estate deal. This will be enough to build Manila’s most modern business city (Makati’s Central Business District is only 100 hectares; that of Fort Boni 250 has.), and enough to jumpstart President Duterte’s “Build, Build, Build” and solve poverty almost overnight. His Free College costs only P60 billion a year. College education is the best way to lick poverty.
Additionally,
• It will make Duterte a great president, and
• It will make the Philippines truly a great nation, overhaul our culture of smallness, and make every Filipino proud of himself.
TRAIN. The Duterte administration has come to be hounded by the adverse effects of its major tax reform law called TRAIN (Tax Reform for Acceleration and Inclusion). So far, what has accelerated is the spiral in prices, especially of food items, and not the inclusion part (which is giving cash dole to the poor).
The rise in prices of major food items in the price index has accounted for 43 percent of the 4.1 percent average inflation rate as of April 2018. These are: Fish 0.6, rice 0.3, Meat 0.4, Vegetables, 0.1. That’s 1.4 points. Add the 0.2 of Catering Services (which is food-related), that’s 1.6 points, plus the 0.2 of Non-Alcoholic beverages (which is reckoned as food), you have 1.8 points, or a full 43.9 percent of the 4.1 percent inflation. For P100 pesos of inflation, P43.90 came from food and food-related expenses.
The 4.1-percent average January-April 2018 inflation rate is more than three times the 1.3-percent inflation rate when Duterte took office in July 2016.
TRAIN’s problem is that it is an esoteric policy that cannot be explained in plain language. In other words, it lacks common sense.
