Taking a look of the millions of Filipino Professionals who are not hesitant to accept jobs lower from their level of educational attainment, or other Filipinos who landed the match job of their profession makes the Philippines as a funnel from hard working people overseas to build the Economy. They are the legion of Philippine Economy Army; the Overseas Filipino Workers (OFW)
Eileen Alcala, cashier in the Upper Crust sandwich shop in Singapore, is a member of the legion of Philippine Economy Army and one reason the Philippines is suddenly looking like a rare investment bright spot after years as one of Asia's persistent laggards.
Put off by tough competition for jobs in Manila, the 24-year-old graduate in hotel and restaurant management left the Philippine capital for Singapore two months ago and now sends over half her monthly pay – about S$500 ($394) – back home.
Taking a look at a professional who landed a job abroad match to his educational discipline; Denis Somoso, an International Taxation Specialist and Accountant of a World Leading Design and Engineering & Construction Firm in South Korea, 32 year old bachelor graduate of Bachelor of Science in Accountancy in MTIM Iligan City left the Philippines for South Korea, given a good benefits from the company rented studio type apartment, free transportation, food and cost of living allowance, two and a half year ago and for the past 2 years sending 95% of his monthly pay – about Krw 2,550,000 ($ 2,200.00 USD) – back home.
Numbers like these highlight steady growth in remittances from the Philippine diaspora – and help explain why the, Standard & Poor's became the latest rating agency to upgrade the Philippines, to BB+. That is the country's highest grade for nine years and one notch below investment grade.
The move reflected the Philippines' strengthening external position, with OFW remittances and an expanding service export sector continuing to drive current account surpluses", S&P said.
Foreign reserves of $76 Billion as of May exceed the country's external debt of $63 Billion. Inflation is below 3.5 per cent and gross domestic product growth, driven by robust electronic exports, is forecast by the government at 5-6 per cent this year.
At a time when many economies are struggling, the Philippines is among only 10 sovereigns in the world with positive outlooks, notes Barclays.
Investors are taking note. Philippine share prices are up a quarter since the start of the year, making Manila the world's fourth-best performing equities market on expectations that the country will win investment-grade credit status by next year.
Indeed, since January 2012 foreign investors have pumped $1.8 Billion into the market, according to Bloomberg, a 265 per cent increase on the same month a year ago.
A "public-private partnership program" (PPP) launched six months ago to overcome infrastructure bottlenecks has not only attracted foreign interest but is boosting the shares of companies seen likely to benefit from government contracts, such as Ayala and Metro Pacific Investment.
"The government is much focused on accelerating the PPP program," said Prakriti Sofat, regional economist at Barclays in Singapore.
Laggards on the exchange have been companies with broader exposure to the economy, such as Philippine Airlines and Manila Electric. Still, constituents in the stock market index are trading on an average price/earnings multiple of 18 times. That compares with 20 times for the Jakarta index and 15.6 times for the Kuala Lumpur index.
The yield on the country's benchmark 10-year government bond, meanwhile, is at 5.8 per cent, down from 6.5 per cent this time a year ago. That compares with a yield on comparable Indonesian debt of 6.1 per cent, against 7.3 per cent a year ago.
Hans Sicat, chief executive of the Philippine Stock Exchange, predicts funds raised through company listings and secondary activity will hit ₱107 Billion Pesos ($2.6 Billion US Dollars) this year.
Yet investors may be glossing over the risk that the two-year-old administration of President Benigno "Noynoy" Aquino may take time to deliver.
"Investors are so bullish, they are forgiving many of the country's structural sins," says Luz Lorenzo, economist at Maybank ATR Kim Eng group.
The Aquino administration's gains in lowering the budget deficit were achieved mainly through lower government spending, which fell as a proportion of GDP to 16 per cent last year, from 17.7 per cent in 2009.
A clampdown on tax evasion has resulted in the filing of scores of complaints against suspected tax evaders. Yet, actual tax collection as a proportion of GDP has barely moved, up from 12.1 per cent in 2010 to 12.3 per cent last year, according to the central bank.
The government's tax take is being eroded by a series of exemptions approved by the former president but Mr. Aquino does get credit for a planned new tax on cigarettes and liquor – so-called "sin taxes". Rogier van den Brink, a World Bank economist, says: "They are closing the net on tax collection."
Poor implementation has plagued previous reform efforts, and analysts warn this is still an issue. "I remind [clients] how it went with power privatization. The law was passed in 2001 but the first assets were sold in 2004, and it was only in 2007 that the process really took off," Ms Lorenzo said.
Still, investing has become easier after exchange trading hours were extended in January from a previous lunchtime close to 3.30pm.
A rule forcing listed companies to have a minimum 10 per cent float by the end of this year has prompted a flurry of secondary market activity. That has spurred foreign participation, which accounts for 38 per cent of the market, says Mr. Sicat. "What we're seeing is a very strong local bid, which is helping improve confidence for anyone who is coming in from the outside."
