Malaysia Shocked Philippines Pledge $1 Billion Dollars to IMF to help European Crisis

In the opinion posted by the NewStraitsTimes a Malaysian online news website, it really surprised that the Philippines is now afford to pledge $1 Billion USD Dollar to the IMF to help the European crisis.

AT the recent G20 Leaders' Summit in Los Cabos, Mexico, 12 countries committed US$456 billion (RM1.4 trillion) funds to beef up the International Monetary Fund's facility to address the financial crises, notably the sovereign debt and banking debacles in Europe.

Three of the 12 contributors were ASEAN member countries at US$1 billion each, namely Malaysia, Thailand and the Philippines. Philippines pledge right then and ahead of Malaysia and Thailand.

Somewhat challenging to Malaysia as the Philippines without any doubts pledged for $1 Billion dollars and later 2 countries followed namely; Malaysia and Thailand

What? The Philippines? 

(It is like saying oh? this beggar could afford now to pledge that much $1 Billies USD Dollars? how comes?)

"It is our obligation to assist those nations who require funding from the IMF. This would also help in stabilising the crisis that is going on in Europe," a spokesman of Philippine President Benigno S. Aquino III affirmed.

These developments surprised many, as the country used to be a net borrower as far as its membership was concerned. In 2006, however, the country prepaid all its outstanding debts with the IMF, given its much-improved external liquidity position. It then achieved its new status by participating in the Financial Transaction Plan as a creditor country in 2010.

The country can afford to lend as it has some US$76 billion in gross international reserves (GIR) at present, thanks in no small measure to the Aquino administration's no-nonsense good governance thrust that attracted foreign investors back to the Philippines.

With strong gross domestic product (GDP) growth sustained through the years -- and a surprising 6.4 per cent growth for the first three months of the year -- global financial institutions have certainly noticed. Morgan Stanley recently listed the Philippines as one of the "breakout nations", and Goldman Sachs' proclaimed it among the "Next 11" countries. In a May 3 article aptly titled "The Philippines astounds the skeptics", Bloomberg Businessweek cited the great strides that resulted from governance reforms and infrastructure developments. For those who can wait it out, there is the HSBC's forecast that the Philippines will be the 16th biggest economy in 2050. But that's getting too far ahead of our story.

In my and others' views, a realistic barometer of the vigour of the economy is that there are less young Filipinos looking for jobs overseas because of available good ones at home, notably in the business process outsourcing (BPO) and related sectors. These companies, which handle customer support, technical problems and other tasks for overseas clients, now provide employment to some 638,000 people and took in US$11 billion last year, about five per cent of the country's GDP. This makes the Philippine BPO voice-related services, in particular, the biggest in the world, even ahead of India.

Our region is looking forward to the establishment of an Asean Community by 2015, with deeper integration of national economies at its core. It would do well to have more business companies within the region collaborating for mutual benefit.

There has been a substantial Malaysian business presence in the Philippines since the 90s, with the likes of Maybank, Berjaya and other companies.

In fact, there has been a surge recently in two-way investments. AlloyMTD Group, which rehabilitated the South Luzon Expressway, is constructing nine mini-hydroelectric dams in northern Luzon and a government offices complex in Laguna province. CIMB Bank bought into the Philippine Bank of Commerce, with investments reaching some RM1 billion.  After profitably operating the Resorts World Manila hotel-casino across Manila's international airport, Genting is investing in a second casino complex by the famed Manila Bay to be completed in 2016, in the new "Entertainment City", which aims to rival Macau.

Investment flows being by nature two-way, Petron Corporation recently completed its purchase of the retail services business of Esso Malaysia Bhd, with investments worth at least US$610 million.

Business opportunities in the two countries were the focus of an investment forum in Kuala Lumpur last May, which was attended by some 300 businessmen and women. Present were Philippine Vice-President Jejomar Binay, who led a delegation of 24 leading Filipino businessmen and officials from the Philippine Chamber of Commerce and Industry.

Right after meeting Binay, Prime Minister Datuk Seri Najib Razak tweeted: "Fruitful discussions that will hopefully strengthen socio-economic ties." This is a sign that Philippines-Malaysia relations have nowhere to go but up.

Sectors for productive collaboration were highlighted by both the Philippine Department of Trade and Industry and the Malaysian External Trade Development Corporation (Matrade), notably tourism infrastructure, agro-business, mass housing, energy/electricity, logistics, Islamic finance, halal food and investments opportunities in the Autonomous Region of Muslim Mindanao.

What impressed those at the forum were the two messages delivered by Malaysian investors already doing business in the Philippines.

First, the Philippine has a large consumer market of 94 million people, the largest in Southeast Asia after Indonesia, which cannot be taken for granted.

"The Philippine has all the ingredients for success. We want to invest in a country with the right population so that there is a big consumer base. The Philippines is a big customer base," said Berjaya Corporation founder Tan Sri Vincent Tan.

Second, despite its occasional noisy internal politics, business has remained profitable through the years, AlloyMTD Group CEO and Malaysia-Philippine Business Council pro-tempore chair Datuk Azmil Khalil stated. (Well, it isn't the Philippines if the politics is any less exciting). It also helps to consider the other factors that make the country a preferred investment destination with the following points as the Philippines in the NOW:

  1. THE best global BPO destination;
  2. A TOP global electronics assembly hub;
  3. THE world's fourth largest shipbuilder;
  4. THE world's next mining power;
  5. ASIA'S trusted logistics support center;
  6. ABUNDANT managerial talents,
  7. HIGHLY skilled, reliable, English-speaking workforce
  8. LIBERALIZED investment and incentives policies, and,
  9. IT is home to Boracay, Palawan, and some of the best beaches and diving spots in the world, for those serious at both work and play.

The Philippines has its fiscal house in order and is now a lender nation. It is vigorously reaching out to its neighbors and strengthening relations with them. Truly, exciting times are ahead; it added.

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