MANILA, Philippines — Manny Pangilinan, the chairman of Metro Pacific Investments Corporation (MIPC), said that the resources in South China Sea could be one of the major pillars of Philippine growth as he called on the private sector to help the government in growing the economy.
During the BusinessWorld Economic Forum in Shangri-La at the Fort in Bonifacio Global Cityon Friday, Panglinan said that although not yet visible in the economic radars of businessmen, South China Sea held vast amounts of resources that could spur Philippine economic growth.
“The South China Sea and its resource potential are something that probably are not visible on our economic radars,” Pangilinan said in his keynote address.
The MIPC chairman said that with the impending depletion of the gas reserves at Malampaya, the Philippines should start looking for other sources. Otherwise, he said, the country would have to import this source of energy.
“We simply cannot leave the three gas plants we have of about two or three thousand megawatts that are in Batangas stranded,” Pangilinan said as he also warned that failure to look for other energy sources could result in a slew of blackouts hitting the country.
Pangilinan however admitted that exploring the potential of South China Sea would be difficult without getting Chinese cooperation. Hence, the first critical step is to determine if there are indeed gas resources in the area.
China claims almost the entire South China Sea where US$5 billion worth of trade passes through yearly. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have rival claims over the area.
According to Pangilinan, the best estimates of resources at North Bank in South China Sea put gas reserves there at 2.6 trillion cubic feet of gas, about the size of Malampaya when it opened. This is on top of around 65 million barrels of oil that could possibly be found in the location.
Pangilinan said that the open and constructive approach of President Rodrigo Duterte was encouraging as the Philippines would need to deal with Beijing because it was an economic and military superpower.
“We need to deal with China. They are undoubtedly a military and economic superpower,” he said.
Aside from the potential resources in the South China Sea, Pangilinan also mentioned the government’s tax reform, infrastructure drive and investments in businesses as the other drivers of Philippine economy.
Pangilinan said that comprehensive tax reform program (CTRP) of the government would make the tax system simpler and fairer by decreasing the number of tax brackets and reducing the tax rate for low-income groups.
Corporations will also benefit from the reform the tax system of the country as it would lower tax rates for them, according to Pangilinan.
“CTRP is central to Dutertenomics. It is in fact the catalyst to the government’s 10-point economic program. That is why I believe the business sector should support it,” said Pangilinan who noted that the government needed the money to be generated by the CTRP to fund its infrastructure projects and investments in education, healthcare and social safety nets.
Pangilinan said that the government’s increase infrastructure spending would also spur economic development. He said that with the government’s plan spending for infrastructure would rise from 5.4 percent of the gross domestic product (GDP) to 7.4 percent of the GDP.
He however recognized that there might be dangers in this platform of the government.
It is important for the country to maintain robust economic growth to accommodate the debts that the Philippines will incur with these plans, according to Pangilinan.
“That’s why it’s important for business to support in whatever way we can to keep the GDP growing at 6 to 7 percent,” he said.
He also asked the government to assess if it had the capacity to executive these big-ticket projects.
Miguel Belmonte, the president and chief executive officer (CEO) of BusinessWorld, agreed with Pangilinan that infrastructure was a pillar of Philippine economic growth.
In his opening remarks, Belmonte said that a central piece of the local economic puzzle was the money the government would allocate for roads, bridges, airports and transportation systems.
Belmonte also recognized that infrastructure could be mired with many difficulties such as issues with right of way, delays, inadequate funding, endless re-bidding and corruption.
“We are pleased that in its bid to spur national development the government is dead set in making the golden age of infrastructure happen behind the framework of what it calls ‘Dutertenomics,’” he said.
The last pillar of economic growth according to Pangilinan is the investments of the government in businesses that would complement its projects.
He cited as an example investments in tourism, hotels, restaurants and recreational facilities that could be done once an airport had been constructed in an area.