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| Bangui wind turbines. From Flickr |
Specifically, Fitch gave credit to Arroyo's--not the present--administration for laying the economic foundations into what we have now.
That's a sobering thought.
Perhaps, the most prescient reaction to the upgrade is that of William Pesek in his piece he wrote yesterday for Bloomberg. In it he said that the "sick man of Asia" has the unique ability to disappoint even the most hardened optimists. And for good reasons. While he lauded Aquino's administration for its drive for more transparency in governance by punishing his predecessor and ousting a former chief justice, putting a cap on runaway overpopulation and addressing chronic tax evasion, he wondered aloud,"where does Aquino go from here?"
Specifically, he is worried if Aquino's successor would have a divergent view on reforms that could unravel what has been achieved so far. But it won't require a new president with different ideas to nullify the ratings upgrade.
It only requires that we fail to manage and improve our the basic infrastructures that are hounding economic progress.
Just yesterday, my flight to Manila was delayed due what was euphemistically called "air traffic congestion" which actually demonstrates the inadequacy of our transportation systems. The creation of modern international airports and improvement of existing ones have been have been priority projects at the start of this Administration, but none seemed to have taken off. Even what looked like a simple project such as the expansion of the Mactan international airport has been bogged down by changes in the bidding procedures and likely political posturing.
Major road and transportation projects which are the pillars of the much-touted public-private partnership (PPP) program have not even broken ground. What happened to the Daang-Hari interconnection, the extension of our light rail transport system and the planned ports?
The other pillar that needs to be strengthened is the power sector. Here, the Administration deserves a grade of at most a "C", for going into the motion of trying to.
Consider for example, the feed-in tariff (FIT) system which ought to jump-start the use of renewable energy sources such as wind and solar by guaranteeing a reasonable price of power generated by renewable energy companies. The renewable energy law was passed in 2008 but the feed-in tariff mechanism was only released July of last year or four years later, and only solar projects of between one and 3 MW would hopefully stand to benefit starting next year, according to Mario Marasigan, the energy department's renewable energy bureau chief revealed in an interview with reporters a few days ago.
Forget about those for geothermal and wind; that would be three to five years away, he added. The government has not even approved any of the hundred or so projects that have been submitted for consideration under the renewable energy act.
Marasigan's lame excuse for the snail-paced roll-out is that the government was introducing a completely new energy financing scheme and this took time to get right.
Don't be kidding.
The feed-in tariff scheme has been around for so long and this has been credited for the ballooning of renewable energy projects in major countries such as the United States and Germany since the 1990s. We have been articulating for a speedy resolution of the scheme a long time ago in several posts such as this one.
In the meantime, halfway through the term of the present administration, no significant capacity has been added to the power grid.
Let's come back to what Pesek warns: "Every five years or so, markets get all excited about change in the Philippines only to regret it. That makes it a fool's errand to predict turning points in this most erratic of Asian economies."
He might be proved correct.
And the early Easter gift by Fitch might turn up to be an egg.
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