PH needs ‘judo economics’ to further grow

An expert says OFW remittances are a good source of funds for public goods

MANILA, Philippines – The Philippines must employ “judo economics” if it wants to increase investments needed to boost infrastructure and attain inclusive economic growth, an expert said.

“Judo economics can make a bigger guy fall which is exactly what you need for a country like the Philippines. You have to be strategic in positioning yourself,” Asian Institute of Management Policy Center Executive Director Federico Macaranas said. Macaranas made the statement on the sidelines of the Public Governance Forum organized by the Institute for Solidarity in Asia on Tuesday, March 19.

Macaranas said this strategy could be applied on investments. He said aside from growing foreign direct investments, the Philippines should also capitalize on the $20-billion overseas Filipino remittances.

He said using OFW remittances for public goods would make a significant difference in boosting investor interest and confidence.

Macaranas said OFWs are the country’s middle class and they have the resources to invest in various financial instruments like stocks and bonds. He said he does not believe that only the elite can make such investments.

“Not all OFWs are really looking only for current consumption, they need to invest money for the future because if well managed, why do the Chinese peasants earn money from their stock markets and Filipinos don’t. Why do the Vietnamese have a buoyant stock market and we don’t? And why does Cambodia, a poor country, have a stock market where their poor people participate?” Macaranas said.

“OFWs, remember, are not extremely poor because most of they are professionals. Tell me, the nurses, are they extremely poor, are they the least of the least? No, they’re not,” he said.

Macaranas said agencies like the Department of Finance and Bangko Sentral ng Pilipinas (BSP), and the private sector through the Philippine Stock Exchange must hasten their financial education programs.

He said these programs would encourage OFWs to invest in instruments like infrastructure bonds.

Macaranas said these bonds could be used to finance the construction and improvement of simple local facilities like wet markets, public schools, and even big projects like airports.

“FDIs total around $2 billion, but OFW remittances amount to $20 billion. That’s what should be used for inclusive growth.  Remittances can finance wet markets, improvement of public schools, airports and whatever local governments need.”

“You can float bonds and the OFW money can be pooled together and the locals can monitor whether it’s really used,” Macaranas said.

The country’s net FDI inflows reached $2.033 billion in 2012, up 9.8% from $1.852 billion in 2011, according to BSP data. – Rappler.com