Money sent in by Pinoys abroad may grow by 10%

Money sent home by some eight million Filipino workers abroad is expected to grow by 9 percent this year — more than twice the central bank projection — to $18.91 billion, global credit card brand MasterCard said on Tuesday. MasterCard Worldwide economic advisor Yuwa Hedrick-Wong told reporters the sustained flow of remittances would help push economic output growth to 5.1 percent, higher than the government's forecast of 2.6-3.6 percent. He said remittances, which reached $17.35 billion last year, would continue growing in the near term as a result of sustained government spending. Wong said this year's national and local elections and the spending activities associated with the exercise would the gross domestic product (GDP) by 0.5-2 percentage points higher. He urged policymakers to raise infrastructure investments as a ratio of economic output, noting that the ratio had dipped to 12 percent last year from 21 percent in 1995. Countries that heavily invested in infrastructure such as Japan, China and the US later attained industrial status and posted very high growth rates, he pointed out. Countries that have since heavily invested in infrastructure are expected to grow faster this year. Hong Kong, for instance, will likely post 5.2 percent growth, Malaysia 5.3 percent and Korea 6.3 percent, Wong said. Even Indonesia, which like the Philippines is perceived to have a serious corruption problem, invested the equivalent of 28 percent of GDP last year, down from 31 percent in 1995. "This is very unhealthy. This low investment rate needs to be reversed," Wong said. He argued that corruption was not really a deterrent to foreign investors as shown by the experience of Japan, where corruption supposedly worked to its advantage. "I disagree that investment will not work till the issue of corruption is dealt with," Wong said. Indonesia, for example, attracted $8 billion worth of foreign direct investments in the final quarter of last year alone and $9.3 billion in 2008. This was after foreign capital worth $4.6 billion left that country in 2000 due to political uncertainty. "Corruption per se is not an issue. Indonesia in 2008 had foreign direct investments of $8 billion, while the Philippines only had $1.2 billion. Indonesia is not exactly a place where corruption levels are minimal," Wong said. He also said investments, whether public or private, should be poured in the countryside where about three-quarters of the country’s labor force is situated. Government may offer incentives for business to locate there but in the end, what drives the decision to invest in the countryside is "the certainty of return on investment." "Raise the return on investment and business will locate in the countryside," Wong said. — NPA, GMANews.TV