Home » SCMAP Perspective » GDP Growth and Logistics

Over the past several months good news continued to pour out over the Philippine economy. Excellent GDP growth of +6.5%,continuously improving credit ratings, a series of record performances by the Philippine stock exchange, nice words from the World Bank, of the Philippines becoming an Asian tiger economy, etc. Even in the tourism sector, we received bright news of more fun – Boracay as best island, Amanpulo as third most exotic island.

 

With one exception. We hear from ordinary workers and consumers, “We don’t feel the excellent GDP growth”. How can we have all the good news when the ordinary man on the street does not feel any benefit from the GDP growth? Is somebody lying here?

 

There is no paradox here. All the good news is true. And the ordinary citizen is also telling the truth. How so? The answer is easy. Conveniently the answer has been published recently in major newspapers. On March 4, 2013 the Inquirer published on its front page “40 families own 76% of growing PH economy”.

 

We quote from the Inquirer. “Optimism is soaring that the Philippines is finally becoming an Asian tiger economy, but critics caution a tiny elite that has long dominated is amassing most of the new wealth while the poor miss out.”

 

“However, economists say that, despite genuine efforts from Mr. Aquino’s team to create inclusive growth, little progress has been made in changing a structure that, for decades, has allowed one of Asia’s worst rich-poor divides to develop.”

 

I think it’s obvious to everyone that something is structurally wrong. The oligarchy has too much control of the country’s resources”, said former NEDA chief Cielito Habito. Habito’s data shows that in 2011 the 40 richest families on the Forbes wealth list accounted for 76% of the country’s GDP growth. This was the highest in Asia. In other countries the top 40 accounted for a smaller percentage of the GDP growth: 33.7% in Thailand, 5.6% in Malaysia and only 2.8% in Japan.

 

Habito further stated that the top two Filipinos in the Forbes list (Henry Sy and Lucio Tan) were worth $13.6 billion combined, equivalent to 6% of the Philippine economy.

 

I have in a past column dealt with the issue of dominance of the elite. Apart from the basic economic structure biased towards the rich, there are natural principles as economies of scale and built in advantage for the rich such as size is might.

 

The plight of the poor citizen can be seen in the disappearance of the small entrepreneur, the sari-sari store owner.

 

What About Logistics?

Enough said about the dominance of the elite. What does this do to logistics? The logistics requirements of industry will not grow as much as the GDP, simply because the GDP growth is going to a few families. The purchasing power of the consumer will not increase proportionately to the GDP growth.

 

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email scmap.org@gmail.com. Those interested in SCMAP training and other activities are requested to send their e-mail addresses.

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