Philippines vs Indonesia: Which is 'better' in Economic and Investment Aspects?

Which is winning the battle between the two rising economic stars?

It's been a close battle between Asia's two rising economic stars -- Philippines and Indonesia.

At first, Indonesia was edging ahead with its two investment grade status from Fitch Ratings in December 2011 and Moody's in January 2012.

But slowly and surely, the Philippines has crept up from behind, achieving its first investment grade rating from Fitch Ratings on March 27, and now its second from Standard and Poor's on May 2.

Philippines and Indonesia both have two investment grades from different credit rating agencies. Graphic by Matthew Hebrona/Rappler

Both countries, which are considered Asia's new tigers have been demonstrating strong economic growth against a sluggish global economy, almost catching up with Asia's other economic powerhouses, China and India.

So the tallies are even, but which one is really winning?

GDP growth

In terms of GDP growth, the Philippines has emerged a winner with a 2012 GDP faster rate of 6.6%.

Indonesia, on the other hand, saw its economy slow down after the government failed to reduce subsidies, which drained the government's finances, hurting the rupiah, resulting in lower foreign investor confidence. Indonesia grew at 6.23%.

On Monday May 6, Indonesia reported a first quarter 2013 growth of 6.02%, the slowest pace in more than two years. The Philippines is due to announce their first quarter results on May 30.

In the 3rd quarter of 2012, the Philippines recorded a growth of 7.1%, replacing Indonesia as the second-fastest in Asia next to China's 7.7% and the fastest in Southeast Asia. Indonesia, which dropped down to 3rd position, registered a growth of 6.2%.

The year 2012 saw a turning of tables for the Philippines. In 2011, the Philippines expansion of 3.9% was well below Indonesia's growth rate of 6.5% in 2011.

Aquino vs Bambang Yudhoyono

The promises of Presidents Susilo Bambang Yudhoyono in Indonesia and Benigno Aquino III in the Philippines to fight corruption, lower budget deficits, and bring in investment has won them both upgrades from Fitch Ratings and Moody's Investors Service in the past year.

Philippine President Aquino, who is halfway through a 6-year term, has been successful in increasing state spending and managing the budget deficit, while seeking more than $17 billion of infrastructure investments to spur growths.

The country's budget deficit has been brought down to 2% of gross domestic product (GDP) by 2012 from 3.9% when he took office in 2010. Aquino has also increased tax collections, passed the controversial sin tax law amendments, and ousted former Chief Justice Renato Corona in 2012 for illegally concealing his wealth.

Indonesian President Bambang Yudhoyono, who is in his final year in office, failed in 2012 to cut fuel subsidies, which have drained the government finances. This means the government has to find more funds to allocate to infrastructure spending.

According to the World Bank, the President Yudhoyono has said that his government is weighing the pros and cons of raising fuel prices or choosing another method that would more effectively target the subsidies at poorer consumers in a nation where almost one in 5 people lives on less than $1.25 a day.

Foreign investments

In this arena, Indonesia has the lead. The country has been attracting the second biggest chunk of foreign direct investments - $19.2 billion in 2012 - flowing into Southeast Asia, next to Singapore's $54 billion.

The Philippines on the other hand has remained a laggard, capturing only $1.5 billion in 2012.

Corruption Perceptions

The Philippines has the lead and is now seen as less corrupt than Indonesia. The Transparency International's Corruption Perceptions Index has boosted the Philippines' ranking to 105th place in 2012 from 139th in 2009, a year before Aquino became president.

Indonesia on the other hand was ranked 118th last year, slipping from 111th three years earlier.

As both rising stars diverge in their economic growth, it remains to be seen who will emerge the clear winner.

Investment destinations

To fund managers, however, both investment destinations remain attractive, and some don't even have to choose between the two.

Amid the economic woes, belt-tightening measures, gloomy outlook and credit rating downgrades in the west, most investment funds on the lookout for solid growth are eastward-bound.

A global fund manager told Rappler that the competition for investors' attention is not between Indonesia and the Philippines, but against other emerging economies in other regions, like Eastern Europe and South America. - with research from Ramon Calzado and Lean Santos

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A Filipino in Antarctica: Cold continent, hot Neutrinos science, Philippine Flag raised

PHILIPPINE FLAG AT THE SOUTH POLE. A Philippine flag (R) flutters in the strong Antarctic winds, along with American (C) and Chilean (L) flags atop the IceCube observatory, Amundsen-Scott South Pole Station, Antarctica. Photo by Blaise Kuo Tiong

In the southernmost point of the planet, one of the most unforgiving places on Earth, scientists are trying to unlock the mysteries of an elusive type of subatomic particle.

Among these scientists battling high winds, below-zero temperatures, and isolation, is Blaise Kuo Tiong.

Born and raised in the Philippines to Filipino-Chinese parents, Blaise left for the United States at the age of 9. There, he pursued a degree in Mathematics at the University of California, Los Angeles (UCLA). After graduation, he worked at the NASA Jet Propulsion Lab (JPL) in California.

After that, he moved to the IceCube South Pole Neutrino Observatory, where he works at present. IceCube is one of the world's major research centers dedicated to understanding subatomic particles called neutrinos.

Neutrinos are very light, elusive particles that have a neutral charge, rarely interacting with other matter. They are believed to be one of the most numerous particles in the entire universe. They help us understand various phenomena, from radiation in a nuclear plant to a range of cosmic processes, helping us get to know our universe and its quirks.

At IceCube, Blaise and his team work with a "downward-looking" telescope, detecting neutrinos as they pass through thousands of meters of ice.

For example, when a supernova explodes, the neutrinos coming from it arrive before the light does, pointing where supernovae explode. Scientists are then alerted when and where a supernova will explode, allowing them to peer into their telescopes.

Rappler talked to Blaise via a Google+ Hangout, and he talked about his work, living in Antarctica, and his Filipino roots.

Working at the South Pole

WORKING IN THE COLD. Blaise Kuo Tiong checks on one of IceCube's equipment buried in the Antarctic ice. Photo courtesy of Blaise Kuo Tiong

Rappler: What is your job like on a typical day?

Blaise: There are physicists who do the research, [and] software programmers who refine the filters of the search to make the data more clustered and easier to be analyzed. Then there are people who work on computers, like me. Our tech needs to be running 24/7. We wouldn't want to miss anything. If a supernova happens and the computers are down for 10 minutes, that is a disaster.

Every day we collect about a hundred gigabytes of data that we upload via satellite to our networks in Madison, Wisconsin (headquarters of the IceCube project, at the University of Wisconsin). But there's another terabyte of data that gets clumped each day; we store it on tape and then send them by airplane.

R: How is it like working in Antarctica?

B: We are always asked the same question: "Why would you want to go there? There's nobody here, you're cut off from the rest of the world." But I think that is the appeal. You have to rely on your own to solve the situations that can come up.

We're here at almost 9,500 feet. When I first got here, I couldn't do any work because I was always short of breath. But the cold is actually okay. If you put on the gear to keep you warm when you are outside, before you know it, you're already sweating in your jackets.

Life in Antarctica

R: How is life there outside work?

B: Right now it's too cold so most of the activities we do indoors. We have a big gym here where we can play a lot of sports. We spend a lot of time watching movies, video games or board games. I think next weekend there's going to be a tournament of a card game. A couple of weeks ago, I found some beans and made a sungka board. I also brought some mahjong tiles so we play that once in a while.

R: In Antarctica, there are 6 months of continuous daylight and 6 months of continuous darkness. What are the best and worst things about that?

B: The best thing about an all-day 'night' is that you could look at the stars 24/7... Today, there's a full moon and a halo on the moon called the 'moondog.' It looks crazy. It looks like it's on a different time practically. We also got some pretty good auroras today -- those shimmering green lights. Those you can't really see in the rest of the world besides the polar regions.

POLAR LIGHTS. Aurora australis light up the Antarctic sky. Photo by Blaise Kuo Tiong

R: When is it hottest and coldest in Antarctica?

B: In the summer months I'd say around January is when it's the hottest. We probably reach maybe -10°F. There was a time during the summer that we actually had a 2-mile race in our shorts. During winter time, it reaches -100°F. Right now it's at -66°F. Yesterday was about -85°F. Weird thing is it can get 40°F, where it could go -60°F from a -100°F like almost overnight.

R: There is only one sunrise and one sunset a year. How long do they last?

B: We have a sunset at March but it took about two weeks before you couldn't see the Sun anymore. It's interesting: the Sun sits at the horizon for that long until finally you can't see it. The sunrise should be about the same and it will happen right around August or September.

Filipino roots, Filipino pride

R: There's a photo of the observatory with 3 flags flying up there, and one of them is the Philippine flag. Did you raise that?

B: I brought two flags down here with me (American and Philippine). When the station closed last February the first thing I did was put up the American flag, a Filipino flag and a Chilean flag. So they're all hanging out there now. Hopefully they'll last over the season. I have one back-up in case the first one gets destroyed because there are pretty high winds here at times.

R: How connected are you to your Filipino roots?

B: A lot of my family on both sides still live in the Philippines; being Filipino is definitely part of my identity. In the last few years, I visited at least every other year, almost every year. I like to visit just to not lose track of those roots.

PINOY IN ANTARCTICA. Filipino scientist Blaise Kuo Tiong at the IceCube South Pole Neutrino Observatory. Photo courtesy of Blaise Kuo Tiong

R: Where do you go when you get here?

B: A lot of my mom's relatives are in Ilocos and Vigan. A lot of my relatives are in Manila as well, and some are in Cebu. I usually visit those places.

But obviously, it's the beach. The last time I was in the Philippines, I think I went to about 20 beaches. I know I went to Bohol and to Palawan. I'd say Philippine beaches are some of the best I've ever seen. Definitely the sand in Boracay you can't find it in anywhere else. And the diving is so good in Palawan, Batangas, Bohol.

R: What are your plans after the cube?

B: I got here in November and will go out after a year. Well, I'll probably do a little traveling first. People who are the Antarctic program -- that's one of their passions. If you're sitting down doing dinner, everybody's talking about the places they've been or the places they want to go to. After that I'll probably go back to the States. I have a family in Los Angeles, and a lot of my stuff is there. I'll probably think of the next challenge, which I haven't thought of yet. And in the next 6 months, that would probably be it.

For more about his research and research life in Antarctica, visit http://antarctica.kuotiong.net/. –

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