The population of the Philippines has doubled to 91 million in the past 50 years, necessitating President Arroyo’s plan to create 10 million new jobs by 2010

On the path to prosperity
The archipelago nation aims to achieve First World status by the end of the next decade. President Gloria Arroyo has three years left to help it on its way to becoming a wealthy country

The district of Tondo in northwest Manila is one of the most densely overcrowded places in the world. The 400,000 Filipinos who live there occupy an area of just over two square miles – itself part of a greater metropolitan zone, that throngs with 16 million people during the working day.

Over the last half-century, the population of the Philippines has been doubled to 91 million by the highest birth rate in Asia. 40 per cent of Filipino citizens live on less than two dollars a day. Many – more than eight million, or almost a tenth of the population – have been driven to work abroad. The economy depends heavily on the money they send home; remittances from overseas workers amount to as much as 13 per cent of gross domestic product.

Some forecasters say the population could double again over the next three decades. But, according to the archipelago nation’s president, Gloria Macapagal Arroyo, the Philippines is moving towards becoming a much more prosperous place well before then.

Elected to a six-year period in office in 2004, Ms Arroyo has three years left to achieve the basic goals of her national development plan up to 2010. Her objectives include the creation of 10 million jobs, balancing the budget, widening education provision, building a modern transport and digital infrastructure, and extending power and water supply. She believes the Philippines will become a First World country over the next 20 years.“By 2010, we should be well on our way to achieving that vision,” she says.

The keys to success will be foreign investment and a higher, and sustainable, level of growth. The president believes that massive devolution of development from national to regional level will break down bureaucratic barriers and bring about a quantum leap in investments and jobs. Her strategy is to prime the economy by forging four super regions, each focused on its own particular economic strength.

North Luzon and Mindanao are envisaged as agri-business centres, Metro Luzon as an emerging commercial centre, and the central Philippines as the country’s tourism hub. A cyber corridor will link all four, incorporating information and communications technology centres and the business process outsourcing industry (BPO), the fastest growing sector of the economy.

Funding is earmarked to come from additional tax revenues, but private sector participation in developing the infrastructure and transportation systems is also essential.

The response from the international investor community has been positive. Last year saw incoming foreign direct investment almost double to $2.3 billion. Most of it came from the United States, Japan, Singapore, South Korea and the British Virgin Islands.

Central bank governor Amando Tetangco expects investor interest to continue, given the improvement in macroeconomic fundamentals under Ms Arroyo and “stable” ratings from credit rating agencies.

Further initiatives are needed to make the country more investor friendly, but what it offers is a huge domestic market, a highly trainable, low-cost English-speaking workforce and a liberalised economy that allows foreign investors to participate in nearly all aspects of business. This gives the country huge potential in areas ranging from energy, infrastructure, and IT to manufacturing, mining and tourism.

The Philippines must compete with its neighbours for its share of the increasing inflows of FDI into the ASEAN region. Once its potential is unleashed it could emerge as a regional leader and be on the way to achieving its president’s dream of First World status.