For Juan dela Cruz, investment grade status for PHL may hardly be felt

Philippine markets, government officials and the business community rejoiced on Wednesday over the news that global credit watcher Fitch Ratings had raised the country’s status as a borrower to investment grade from a notch below that category. Ordinary Filipinos, however, are scratching their heads and wondering what the fuss is all about. Fitch upgraded Philippine creditworthiness to BBB- or an "investment grade rating" from BB+. It was a first for the country that was once billed the economic "Sick Man of Asia." The markets reacted with an uproar as people who knew what an investment grade was all about pumped money into the stock market, which was already reeling from an overbought situation since the year began on a downtrend. The reaction brought the benchmark PSEi to its 24th all-time high in the year-to-date on Wednesday. Economists and business executives foresee the advent of a friendlier environment for investments, lower interest rates to finance investment, and quality jobs for nearly 10 million Filipinos who were unemployed as of last January. The logical conclusion is that an investment grade rating could strengthen industries by attracting more investments due to the low cost of funds, as Fitch noted in its rating statement that the basis for the upgrade was a well-managed economy in fiscal and monetary terms—an assurance that creditors will be promptly paid by Philippine-based borrowers. President Aquino, who has been reaping economic rewards for his efforts to stamp out corruption and pursue good governance initiatives in what was once Asia’s economic pariah, noted that the government could provide more "social protection" programs and "economic stimulus" using a potential pool of "low-cost funds" due to the lower interest rates on borrowings. But the excitement has not exactly trickled down to many ordinary Filipinos, who are asking how the investment upgrade exactly translates into a better life for them. Sought for comment on Thursday, some expressed the hope that they would soon feel whatever positive impact this upgrade would bring to the local economy. For big investors only "Para lang 'yan sa mga namumuhunan lang pagka nag-invest sila... Binibigyan ng gobyerno ang pabor sa mga investors," said Lito Estorninos, a tricycle driver for 30 years in Quezon City. "Sila [big businesses] siguro," agreed vulcanizing shop owner Elias Rambuyong, when asked if he thinks he would benefit from the upgrade. "Pero mga ordinaryong tao, hindi. Marami pa ring mahihirap, eh." A 69-year-old sari-sari store owner who asked not to be named believes the upgrade will only benefit rich people. "'Yung mga mayayaman, lalo lang yayaman. Pero 'yung mga mahihirap, kadalasan stable, pero marami sa baba pa rin," he said. "Sila kasi ang may businesses eh. Tayong maliliit, ano ang mapapala? 'Pag as an employee, wala. Tayong mga ordinaryo, wala, hanggang survival lang. Hindi tayo pwede umangat," he added. Rambuyong noted that the rating upgrade would not benefit him at all in terms of lower interest rates, even if he borrows P10,000 and sells his tricycle for P23,000 just so he could start his own business. "Sa mga maliliit na negosyo, walang epekto," the shop owner said. "Sa vulcanizing, wala namang tax rito, eh. [Ang investment grade] para lang makahatak ng investors ng ibang bansa." Low-paying vs. quality jobs More credit for Philippine investors and industries could potentially create more jobs, but Estorninos lamented that many companies still provide only low-paying and low-quality jobs. "Pagka mag-umpisa na silang magbigay ng trabaho, mababa naman ang rate. Minsan babawiin sa oras—sampung oras pero minimum pa rin ang sahod," said Estorninos, who earns P200 a day as a tricycle driver. The sari-sari store owner also pointed out that many companies would likely just churn out contractual jobs. "'After six months, tanggal ka na," he said. Estorninos lamented the contractual nature of labor in the country, adding that companies could save heaps of money by not promoting workers to regular status. "Makakatipid sila. Kikita rin 'yung mga hahawak ng empleyado, dahil walang regular na trabaho," said the tricycle driver, who once worked as a contractual air-conditioning technician for a company. Meaningless to the impoverished The militant umbrella group Bagong Alyansang Makabayan said the credit upgrade is not likely to mean much for impoverished Filipinos. According to the latest government data, more than one-fourth of the population lives below the poverty line. "The upgrade seems meaningless to the poor. The type of investments it may attract may not necessarily create jobs, especially if these are portfolio investments," Renato Reyes, Bayan secretary general, noted in a text message to GMA News Online. The "credit rating looks good only on paper. But without new jobs, the ratings upgrade will remain a hollow indicator not felt by the majority," Reyes said. "The neoliberal notion that investments will trigger growth has long been debunked by our own experience," he added.  What Filipinos need Sonny Africa, research head of the non-profit organization IBON Foundation, noted the upgrade would "not translate into enough decent-paying jobs for the country as long as government policies skew economic activity away from developing genuinely Filipino manufacturing and local agriculture." Africa, who is also an economist, said big businesses and not the majority of Filipinos would benefit from the rating. "The economy has instead been directed towards low domestic value-added trade, transport, communication and storage, finance, construction and utilities. The transnational corporations and Filipino oligarchs in these sectors will be the biggest beneficiaries from lower borrowing costs, not the majority poor Filipinos," he said in an e-mailed statement. Still, there are those who say they are hopeful—for now—about the supposed benefits of the upgrade. "Pwede na rin  'yan," Estorninos said. "Marami rin kasing walang trabaho rito," he added. "Maganda sa atin na ang foreign investors ang magbibigay ng trabaho. Mas mabilis ang pag-angat ng ekonomiya," said Rambuyong. The sari-sari store owner was more optimistic, saying the upgrade would just take six months to a year for it to be felt by the masses. "May mararamdaman ng kaunti, pero hindi pa kasi bago pa lang 'yan, eh." Despite their positive sentiment, they said they were surprised why the country was given an upgrade in the first place, noting their financial situation in a country seen as economically resilient. "Siguro may halong pulitika 'yan, para bumango ang pangalan," said Rambuyong, citing the upcoming midterm elections. "Sinasabi nilang maunlad ang ekonomiya. Pero itanong mo sa mga tao kung ano kinakain nila, kulang... Dati marami ka nang mabibili sa P30 sa palengke. Ngayon P100, ubos na sa tindahan," Estorninos said. — VS/KG/YA, GMA News