Growth Amidst Bureaucracies:
Review of Philippines and Some Asian
Economic Performance
Bienvenido “Nonoy” Oplas Jr.
Presen...
Outline
I. Economic Growth
II. Bureaucracies
III. Conclusions
Vs. 3rdQ 2012 other Asian GDP Growth Rates:
China 7.7%, Indonesia 6.2%,
Malaysia 5.2%, Vietnam 4.7%,
Thailand 3%, Singapor...
Today, NEDA and NSCB announced a 4th Qtr
2012 GDP growth of 6.8%, so that full year
2012 growth is 6.6%.
Other Asians so f...
Forecasts 1: The Economist
Source: January 25th 2013 issue
A. Growth Leaders, 2012 and 2013:
1. China, 7.7 and 8.5
2. Indi...
Forecasts 2: Asian Devt. Bank
Source: ADB, Asian
Development Outlook,
Supplement December 2012
• On average, developing As...
In case you wonder how GDP is computed…
GDP = C + I + G + (X-M) Demand side
= GVA in Agriculture + Industry + Services Sup...
Growth of World’s Largest Economies A:
Nominal GDP Size in $ Billion, 1992 vs. 2012
Source: IMF, World
Economic Outlook,
October 2012
Database
Over 20 years…
• PH economy grew
4.1x while those of:
• Vietnam...
• Big jump in ranking of Russia due not only to growth
but also in high currency appreciation.
• PH is #12 in population s...
World’s Largest Economies B:
PPP Valuation of GDP Size, in $ Billion, 1992 vs. 2012
Source: IMF,
World Economic
Outlook,
October 2012
Database
Over 20 years by
PPP…
• PH economy
grew 3.4x while
those of:
• ...
(Million 1990 international $) Source: Maddison and OECD
Historical Share of Global GDP for Asia and ROW
Source: Razeen Sa...
Historical Share of Global GDP for parts of Asia
Source: Razeen Sally, “Asia in the World Economy”, EFN Asia Conf. HK, Nov...
II. Bureaucracies
From WB-IFC’s Doing Business 2013 Report
World Ranking in Ease of Doing Business (2012)
Ease of
Doing
Business
Starting
a
Business
Dealing with
Construction
Permit...
Asia Economic Freedom, EFW 2012 ReportAsia Economic Freedom, EFW 2012 Report
0 2 4 6 8 10
Hong Kong
Singapore
New Zealand
...
III. CONCLUSIONS
1. Concentrate on sustaining high PH growth.
Before wealth can be distributed, it must be
created first. ...
3. Asia will be the growth anchor of the world economy in
the coming years, especially its big population
emerging markets...
6. Business environment and tax rates in US, EU
and Japan not good, many businesses and
rich individuals there have jumped...
9. Let’s go for a flat income tax, 15% both individuals and
corporations… in exchange for VAT hike from 12 to 15%.
Flat ta...
Growth Amidst Bureaucracies: Philippines and Asian Experience
Growth Amidst Bureaucracies: Philippines and Asian Experience
Growth Amidst Bureaucracies: Philippines and Asian Experience
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Growth Amidst Bureaucracies: Philippines and Asian Experience

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Analyzing sources of growth and the burden of government bureaucracies.

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Growth Amidst Bureaucracies: Philippines and Asian Experience

  1. 1. Growth Amidst Bureaucracies: Review of Philippines and Some Asian Economic Performance Bienvenido “Nonoy” Oplas Jr. Presentation at the Rotary Club of Manila Bay Astoria Plaza, Ortigas, Mandaluyong City 31 January 2012
  2. 2. Outline I. Economic Growth II. Bureaucracies III. Conclusions
  3. 3. Vs. 3rdQ 2012 other Asian GDP Growth Rates: China 7.7%, Indonesia 6.2%, Malaysia 5.2%, Vietnam 4.7%, Thailand 3%, Singapore 0.3%. I. GROWTH Last November 30, 2012, after the 3rd Quarter 2012 GDP data was announced by NEDA, I wrote this article in www.interaksyon.com...
  4. 4. Today, NEDA and NSCB announced a 4th Qtr 2012 GDP growth of 6.8%, so that full year 2012 growth is 6.6%. Other Asians so far, 4Q 2012: China 7.8%, Vietnam 5.4%, Singapore 1.1%.
  5. 5. Forecasts 1: The Economist Source: January 25th 2013 issue A. Growth Leaders, 2012 and 2013: 1. China, 7.7 and 8.5 2. India, 5.4 and 6.5 3. Indonesia, 6.3 and 6.4 4. Philippines, 5.5 and 6.1 5. Malaysia, 5.2 and 4.5 6. Thailand, 5.8 and 4.2 7. Pakistan, 4.2 and 3.5 8. S. Korea, 2.2 and 3.3 9. Hong Kong, 1.7 and 2.9 10. Singapore, 1.2 and 2.9 B. Contraction: 1. Netherlands, -0.9 and -0.4 2. Italy, -2.2 and -0.9 3. Spain, -1.5 and -1.7 4. Portugal, -3.0 and -2.8 5. Greece, -6.8 and -5.0
  6. 6. Forecasts 2: Asian Devt. Bank Source: ADB, Asian Development Outlook, Supplement December 2012 • On average, developing Asia led by China and India will maintain a fast growth of 6-7% growth this year. • US, EU and Japan will maintain their anemic growth. • EU balancing between contraction and stagnation.
  7. 7. In case you wonder how GDP is computed… GDP = C + I + G + (X-M) Demand side = GVA in Agriculture + Industry + Services Supply side C = personal/household consumption (in PH, about 70% of GDP) I = investments/ gross dom. capital formation G = government consumption (X-M) = exports minus imports of goods and services • Since C comprises 70% of GDP, even if I, G and (X-M) do not grow but if C grows by 10%, GDP can grow by 7%. • Table on the right shows C as main driver of PH GDP growth
  8. 8. Growth of World’s Largest Economies A: Nominal GDP Size in $ Billion, 1992 vs. 2012
  9. 9. Source: IMF, World Economic Outlook, October 2012 Database Over 20 years… • PH economy grew 4.1x while those of: • Vietnam 14x, • Indonesia 6.5x, • Malaysia and Singapore 5.2x, • Pakistan 3.9x, • S. Korea and Thailand 3.4x,
  10. 10. • Big jump in ranking of Russia due not only to growth but also in high currency appreciation. • PH is #12 in population size worldwide, but only #45 in economic size. • Vietnam is growing fast but still far from PH economic size. • Purchasing power parity (PPP) is now introduced, to equalize valuation of output…
  11. 11. World’s Largest Economies B: PPP Valuation of GDP Size, in $ Billion, 1992 vs. 2012
  12. 12. Source: IMF, World Economic Outlook, October 2012 Database Over 20 years by PPP… • PH economy grew 3.4x while those of: • Vietnam 6.1x • Sing. 5x, • Malaysia 4.4x, • S. Korea 3.9x, • Indonesia & Taiwan 3.6x, • Pakistan 3.3x, • Thailand 3.2x • Hong Kong 3.1x, • Cambodia 6.3x, Laos 5.6x
  13. 13. (Million 1990 international $) Source: Maddison and OECD Historical Share of Global GDP for Asia and ROW Source: Razeen Sally, “Asia in the World Economy”, EFN Asia Conf. HK, Nov. 7, 2012 Share of Global GDP per World Region 0 10 20 30 40 50 60 70 80 90 1820 1870 1913 1950 1973 1998 2001 2030 Asia Rest of the World • Industrial Revolution in mid 1800s to 1980s (1+ century) was golden age for Europe and N. America. •1980s globalization and political democratization in Asia started fast growth. • Welfare populism & high debt in Europe and N. America slowed them since the 1990s.
  14. 14. Historical Share of Global GDP for parts of Asia Source: Razeen Sally, “Asia in the World Economy”, EFN Asia Conf. HK, Nov. 7, 2012 Share of Global GDP per World Region 0 5 10 15 20 25 30 35 1820 1870 1913 1950 1973 1998 2001 2030 Other Asia Japan China India (Million 1990 international $) Source: Maddison and OECD * In the next two decades, not so happy Japan – ageing (and declining) population, high public debt, * Big population Asia to grow more.
  15. 15. II. Bureaucracies From WB-IFC’s Doing Business 2013 Report
  16. 16. World Ranking in Ease of Doing Business (2012) Ease of Doing Business Starting a Business Dealing with Construction Permits Getting Electricity Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contract Resolving Insolvency Brunei 83 136 83 28 107 126 122 20 35 151 44 Singapore 1 4 3 5 14 8 2 4 1 12 2 Thailand 17 78 14 9 28 67 13 100 17 24 51 Indonesia 129 155 71 161 99 126 46 131 39 156 146 Malaysia 18 50 113 59 59 1 4 41 29 31 47 Philippines 136 158 102 54 117 126 133 136 51 112 163 Vietnam 98 103 67 135 47 24 166 151 68 30 142 Cambodia 138 171 149 130 110 98 79 54 120 142 149 Laos 165 89 80 138 72 166 182 123 168 110 183 Myanmar n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a China 91 151 179 115 40 67 97 122 60 16 75 India 132 166 181 98 97 40 46 147 109 182 128
  17. 17. Asia Economic Freedom, EFW 2012 ReportAsia Economic Freedom, EFW 2012 Report 0 2 4 6 8 10 Hong Kong Singapore New Zealand Australia Mauritius Taiwan S Korea Cambodia Asia Avverage Philippines Malaysia Mongolia PNG Thailand Sri Lanka Vietnam China India Pakistan Myanmar Source: The Fraser Institute.Source: The Fraser Institute.
  18. 18. III. CONCLUSIONS 1. Concentrate on sustaining high PH growth. Before wealth can be distributed, it must be created first. Forcible redistribution often harms growth and entrepreneurship. 2. High unemployment and underemployment will be slowly addressed if growth is sustained.
  19. 19. 3. Asia will be the growth anchor of the world economy in the coming years, especially its big population emerging markets. 4. Big population is asset. 7 of the 10 largest economies by PPP valuation have huge population of 100 M+ up to 1.3 B. More population means more consumers, more workers, more entrepreneurs. 5. “Tax is the lifeblood of the nation.” – BIR, DOF WRONG. Work and business is the lifeblood of the nation. Tax is the lifeblood of government.
  20. 20. 6. Business environment and tax rates in US, EU and Japan not good, many businesses and rich individuals there have jumped ship, or about to jump, mainly to E. Europe or Asia. 7. PH government bureaucracies, local and national, should reduce business permits, taxes and fees. 8. PH-based businesses, get ready for the good times. Prepare also for contingencies. Government is getting bigger and bigger, taxes will rise higher and higher.
  21. 21. 9. Let’s go for a flat income tax, 15% both individuals and corporations… in exchange for VAT hike from 12 to 15%. Flat tax countries, in percent… • 10%: Kyrgyzstan (2006), Kazakhstan (2007), Macedonia (2007), Mongolia (2007), Albania (2008), Bulgaria (2008), Serbia (2008) • 12%: Georgia (2005), Macau, Belarus (2009) • 13%: Russia • 15%: Hong Kong (1947), Ukraine (2004), Iraq (2004) Montenegro (2007), Mauritius (2007), Czech Rep. (2008) • 16%: Romania; 18% Estonia; 19% Slovakia. Singapore?
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