Commentary (Philippine Daily Inquirer, Wednesday, July 11, 2007)
A recent trip to Bangkok found me wondering how far behind we are now in building our physical infrastructure. Bangkok’s new airport, large and functional, is now one of the best in the region. The sight of it made me dread the thought of returning home through the old and dilapidated Ninoy Aquino International Airport as well as the traffic-snarled Tramo.
Thailand and the Philippines used to be described as twin countries up to the 1960s, when they had roughly the same population and economic size. Curious to check how we now compare, I looked up the World Fact Book on the Internet. In 2006, our GDP per capita was $5,000, while it was $9,200 for the Thais. People living below the poverty line made up 40% of our population, while it was only 10% in Thailand.
Do we blame this on our large population? The World Fact Book says we now number 91 million, while there are 65 million Thais. And while we have reduced our population growth rate to 1.76%, it is still 3 times higher than Thailand’s 0.66 %. This would explain the difference in our per capita shares if we had the same GDP, but Thailand’s stood at $585.9 billion, while ours was $443.1 billion. Thai exports also amounted to $123.5 billion, three times more than our $47.2 billion, FOB.
This is the main reason why the unemployment rate in Thailand was 2.1 per cent, while ours was 7.9 per cent. The Thais don’t have to look beyond their shores to find gainful employment while 8 million of our compatriots endure separation from their families to work abroad.
What accounts for Thailand’s higher production? Production come from a country’s installed manufacturing capacity, and its agriculture and services sector, so Thailand’s higher GDP would not have come about if it had not done a better job in attracting investments. In fact it’s investment rate, at 28. per cent of GDP is nearly twice our 14.6 per cent.
We are thankful for small blessings, such as the reported 6.9 per cent GDP growth during the first half of this year. While some people tend to be skeptical about this figure, given how tax collections have fallen below target, our efforts in attracting call centers and business process outsourcing have obviously produced results. And given good infrastructures we showed that we can attract big investments, such as the $1.6 billion shipbuilding facilities of Hanjin in Subic, and $1 billion expansion plant of Texas Instruments (TI) in Clark. Subic is fast becoming a maritime center with the new shipyard and container port, grains and fertilizer bulk facilities, and dry dock for ship repair. Philippine Air Lines plans to expand its operations to the Diosdado Macapagal Airport in Clark. I am sure this piece of news, along with the anticipated completion of the Subic-Clark-Tarlac Expressway by yearend helped Texas Instruments choose Clark over China despite the more liberal terms the latter offered.
But we have a long way to go before we can ever catch-up with our old twin. Thailand has built 57,403 km of paved roadways while we have 19,804 km. Thailand’s superiority in terms of railways is even more dramatic. Their trains run on 4,071 km of rails while we make do with 897 km of narrow gauge tracks, of which only 40 per cent is operational. If we have more airports (83 with paved and 173 with unpaved runways compared to Thailand’s 63 and 42, respectively) is due to geography. We either fly or ride a boat to island destinations.
But geography is also the reason the Thais have a more extensive irrigation system. They have irrigated close to 50,000 sq km of land, while we have only 15,500 sq km. Of course, Thailand is served by the mighty Mekong River, but we could have built small water impounding systems which are better suited to our archipelagic country. It is not generally known but Thailand also produces nearly half of their dairy products consumption, while we import 98 per cent.
But where did Thailand get the resources needed to build all the infrastructures which in turn attracted investments? One likely source is tourism. Bangkok is the doorstep of travelers from Europe to Asia. And Thailand has a lot to offer than just its location, not to mention its more effective advertising campaign.
In 2006, Thailand received about 15 million visitors who spent $14 billion. The Philippines could not even bring in 3 million tourists to earn $ 2.5 billion. On the other hand, our OFWs remitted an estimated $14 billion last year whereas Thailand does not even keep a record of remittances from its workers abroad. Thus, our combined earnings from visitors and OFWs remittances of $16.5 billion is bigger than Thailand’s comparable figure of $14 billion!
So why then why are we lagging behind? Because we have long failed to harness fully this remittance resource. A Banko Sentral survey showed that after providing for educational and medical expenses, and buying or improving their houses, only 40% of our OFWs save, and most of their savings are kept in banks abroad. Only 10 % invest, while they dissipate their earnings by spending on home appliances, gadgets and fast foods. That is why aside from real estate, Jollibee and McDonald’s franchises are thriving businesses. And malls are favorite places for people to hang out.
The challenge before us then is how to mobilize this huge and continuing resource from OFW remittances for economic development. And this can be done by providing OFWs investment alternatives other than buying tricycles for their relatives.
In this regard, the move of ING and PNB in creating a $500 million Mutual Fund for Overseas Filipino Workers is welcome. But how about creating Special Purpose Investment Vehicles for infrastructure, microfinance or agribusiness for countryside development? For example, extending the Subic-Clark-Tarlac Expressway to Kennon Road would be viable under a BOT scheme. There already exists mainstream traffic in the north-south artery unlike in the missionary east-west Subic-Clark segment. There are other viable infrastructure projects awaiting funding but which local capital plus the $14 billion annual remittance from overseas can fund. We can also put up Special Purpose Vehicles (SPVs) for infrastructures and business ventures that will provide livelihood in rural communities. Our compatriots overseas sincerely want to help. They just have to be shown how. Wouldn’t it be wonderful if we could provide them good investment opportunities even as they do their share in nation building?
