Mining 38: Canada's $7.8 B a year tax revenues vs PH's $0.3 B

* This is my article today in Mining Week.
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Two weeks ago, this report from Resource Clips bannered a bold story, Mining industry has paid Canada $71 billion in last 10 years. Excerpts:

“The Mining Association of Canada released its annual report on December 3 about mining industry payments to Canadian governments, prepared by ENTRANS Policy Research Group. Now in its tenth year of publication, the report found mining payments to federal and provincial government coffers total an estimated $71 billion from 2003 to 2012 in aggregate mining taxes and royalties, corporate income taxes and personal income taxes paid by mining sector employees….

“According to Natural Resources Canada, the Canadian mining industry employed more than 418,000 workers across the country in 2012—representing one in every 41 Canadian jobs. Moreover, mining workers earn the highest wages and salaries of all industrial sectors in Canada. The average weekly pay for a mining worker in 2012 was $1,599, which surpassed the earnings of workers in forestry, manufacturing, finance and construction.”

The 71 billion Canadian dollar is equivalent to around US$ 78 billion at average exchange rate of CA$1.1/US$ exchange rate from 2003-2012. That is an average of US$ 7.8 billion a year, wow.

The Philippines, which is supposed to be a mining powerhouse with an estimated mineral potential value of around US$ 1 trillion, is not able to optimize both its mining corporate revenues and taxes. From 2008 to 2011, the Philippine government was able to collect only around $310 million a year in corporate taxes, fees and royalties, from large-scale mining companies.

Source:  Dr. Elmer Billedo, Assistant Director, MGB-DENR. Presentation at an EITI Conference, September 27, 2013, Crowne Plaza, Ortigas, M.Manila.

The above Philippine data of mining taxes, fees and royalties is understated because (a) it covers only large scale mining firms, and excludes small scale mining that produce huge amount of gold via the black market, and (b) personal income taxes, social security contributions by workers and officials of large mining firms are also not included. By how much is the projected understatement? Maybe +/- $150 million per year, a rough estimate.

The way business uncertainty and financial instability is inserted in the country’s mining sector, both the economy and the government are the net losers here, as shown by preliminary 2012 and 2013 data from the MGB-DENR.

Source: http://www.mgb.gov.ph/Files/Statistics/MineralIndustryStatistics.pdf

Mining gross value production in 2012 was comparable to that in 2010 but lower than in 2011. Production this year, if the first half figures are the basis, should be less than P100 billion, which is even lower than 2009 and 2010 production.

In terms of taxes, fees and royalties collection, this year can be a catastrophe compared to collections in 2008 (P7.7 billion), 2009-2012.

The national government itself should be alarmed of this trend. If certain sectors are against large and corporate mining due to environmental, cultural, political or religious reasons, the national government should help explain to them the threat to people’s livelihood and fiscal shrinkage of collections from the sector. Very often, the same group of people who express strong opposition to large scale mining are also lobbying for more government welfare and subsidy programs, which are sourced from taxes and regulatory fees collection.

The $0.3 billion Philippine government collections from the large mining firms should see shrinkage in the coming years if anti-large mining and anti-capitalism sentiments are not checked and neutralized.

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See also: 

Mining 34: EITI, Taxes and Other Costs of Regulations, September 24, 2013 

Mining 35: Opposition to Mining, Where Do They Come From?, October 15, 2013 

Mining 36: Tax that can Wipe Out All PH Public Debt, October 22, 2013 

Mining 37: Adverse Selection of Anti-Corporate Mining View, November 21, 2013

Transport Econ 11: On Fare-Contracting Taxi Drivers

The campaign by the government (LTFRB, LTO, MMDA, LGUs, etc.) and some private citizens against "nangongontrata (fare contracting) or isnabero" taxi drivers this season is wrong. Airlines, shipping lines, hotels, resorts, can raise their price during the holiday season, why can't taxi drivers?

Bus lines' fares are also government regulated, they can not raise their fares, but buses can adjust by packing in more passengers than usual to maximize revenues. Taxis cannot do that.

One of my friends not only support "nangongontrata" taxi drivers, he initiates the contract. If he is in a hurry and faced with competition from many other passengers, he would wave two bills of P100 each. Taxi drivers snub other passengers and stop in front of my friend and asks, "Ser saan po sila?" (Sir, where are you going?) My friend's destination is worth only around P100-P120 using the usual taxi meter. My friend takes the cab easily. The others can only complain and text their friends, "mahirap kumuha ng taxi".

Taxi drivers and operators should be allowed to raise their fares, especially on holiday season. Like they can put a sign, "Flag down P75" instead of the government-controlled P40. Those who are not in a hurry can snub those expensive taxi and wait for the non-contracting drivers. Those who are in a hurry whose time is higher than the P35 difference in flag down will get that taxi.

A friend, Von Cruz, shared a good observation:

They got to review the system. most of these drivers are on 24-hr shifts. and most do these just to earn that "boundary". Going rate for the boundary is P2000 per day about 2 years ago. Im not sure what it is now. P1200 if you take the taxi out for 12hrs.

On top of this, the drivers also got to put up their own fuel. for 12 hrs driving that should be around P1000? for 24 hrs? I dont know.

So these are just the costs of driving out their units. what if you want to earn P1000 a day being a taxi driver? you probably got to earn around P5000 a day, gross, for that to happen.

But wait. if you earn 1000 a day, you can’t drive for 48hrs straight. you can do this by driving every other day. so drive 24hrs, 3x a week, you earn P3000 a week.

Aaaaand, they get penalized how much when this policy is violated?

This does not take into account that on some days, the drivers cannot even meet the boundary. so there are days, as a taxi driver, that they would work 24 hrs and not earn a single cent. how much is the penalty again?

Yesterday, I walked at Glorietta, then SM Makati, around 2pm. Long lines of people looking for a taxi. I think that was a signal. Some people demonize taxi drivers for demanding higher pay (employees have bonuses, employers have set aside funds for the season, taxi drivers are supposed to earn the usual months). So many taxi drivers avoid areas where there are plenty of spies and "reporters" to LTFRB. Do the passengers win or benefit from this situation? I doubt it. If I were the passenger standing for 20 minutes or more carrying grocery bags waiting for a taxi, I better pay higher so long as I don't stand and wait too long.

The Land Transportation Franchising and Regulatory Board (LTFRB) allows taxi fare deregulation but only for crony firms, like the two airport taxi, Bayan Ko taxi which charges flat rate by zone, and the yellow taxi which charges P70 flag down then P4 per 250 meters. The rest, must charge only P40 flag down then P3.50 every 250 meters.

 Airlines can adjust their fares depending on expected volume of passengers. Thus on rainy/typhoon season, they beg for passengers by charging low fares. On holidays, they charge high. Hotels and resorts do the same. Also boats for hire and horses in tourist areas. Differential pricing is beautiful, it is just and fair for all. This holiday season, even ordinary employees who normally skip or snub taxis take the taxi, they have bonuses, they have to attend many parties and reunions in nice dresses and carrying gifts. Or people hop from one party to another on the same day or night and they avoid driving due to heavy traffic, they have to rely on taxi. Taxi drivers should be allowed to earn high this season.

The economics of ordinary supply and demand for taxi is correct. Government fare regulation is wrong. Either the LTFRB should be abolished, or that agency must deregulate fares. For taxi, jeeps, buses.

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See also:
Transport Econ 6: More on Office Bus Carpooling, July 09, 2012 
Fat-Free Econ 14: Traffic, Car-pooling and LTFRB, June 21, 2012
Transport Econ 7: Encourage Branding, Deregulate Fares of Taxi, January 02, 2013 
Transport Econ 8: Removing MRT and LRT Fare Subsidy, March 08, 2013
Transport Econ 9: MMDA Bureaucratism, May 27, 2013 
Transport Econ 10: MMDA and Car Ban, July 18, 2013

LTO Bureaucracy 4: Renewing a Driver's License, circa 2013

I noticed only recently that my driver's license has already expired, in October this year. So this afternoon, I went to the Land Transportation Office (LTO) satellite office at the Ayala MRT station in Makati. I entered around 2:25pm, got my license and left at 3:58pm or total of 1:33 waiting time. This is longer than my previous experiences in the same office six years and three years ago. A driver's license expires every three years.

Six procedures, not four as the diagram at the LTO office would depict.

1. Show your soon expiring or expired license at Window 1, they will give you a license renewal form, instruct you to undergo a "medical exam".
2. Go to the next room, pay P100, and go through a "medical exam."
3. Go back to Window 1 and submit the filled up renewal form plus the certificate that you have passed the medical exam.
4. Have your photo taken plus give your electronic signature, Window 2.
5. Pay at Cashier, Window 4.
6. Get your new license, Window 3.

The "medical exam/test", you enter a small room, they get your weight, height, asks your normal blood pressure (no actual BP measurement is taken), asks you to read one line of those small random letters with your right eye close, then with the left eye close, and it's done, you have "passed" the medical test, done in 1-2 minutes. Done by J n W Drug Testing Center.

A summary of my experience in renewing a driver's license at LTO, Ayala MRT station office.

Six years ago, October 2007:
Total time spent: 55 minutes
Total fees paid: P350 + P277.63 = P627.63
Drug test fee 250 + medical test 100 = P350
License fee 180 + computerization fee 67.63 + revision of records fee (changed my address) 30 = P277.63

Three years ago, October 2010:
Total time spent: 1:20 hour
Total payment: P817.63
composed of: License fee 350, Computer fee P 67.63, drug test fee P300.00, Medical fee P100.00

December 2013:
Total time spent: 1:33 hour
Total payment: P592.63
composed of: Medical fee P100 + License fee 350 + Computerization fee 67.63 + penalty for late renewal 75

So, over the past six years, there is one improvement, they removed the drug testing procedure and payment of P300. But the waiting time remains high, more than one hour. With continued technological development almost anywhere, things should have been faster.

The aircon was pathetic. One should sit at the inner seats, away from the door, to feel the "con", otherwise, it's just hot air near the door.

Government is really slow, at adapting to changes, if changing at all. That computer fee should be abolished. Even grade schoolers now use computers and laptops in their schools, how much more with a huge government agency like DOTC and LTO.

I heard that in Singapore, a driver's license is for a lifetime. It is only removed or cancelled if the driver gets involved in a serious accident and it was the driver's fault, or the driver has committed repeated violations of certain traffic rules.

We should adopt the same practice here. But given the generally corrupt culture in the government, it is not going to happen soon.
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See also:
LTO Bureaucracy 1: Hidden Costs in Vehicle Registration, May 04, 2010
LTO Bureaucracy 2: Renewing a Driver's License, October 26, 2010 
LTO Bureaucracy 3: Endless Fines and Penalties, November 02, 2011

UHC 21: The PGH, Manila City Government and Civil Society

An official of the University of the Philippines (UP) Manila, where the College of Medicine and the Philippine General Hospital (PGH) is based, Dr. Tony Leachon who is also a friend, posted in his facebook wall about the need to raise the budget of the PGH.

This year, the UP System (UPS) total budget is P9.53 billion of which P2 billion goes to PGH alone. Next year, UPS total budget will be P8.1 billion, and again, P2 billion of which will go to PGH alone. This year too, UPS’ capital outlay (CO) is P1.45 billion but zero for next year.

(See http://www.dbm.gov.ph/wp.../uploads/NEP2014/VIII/VIII.pdf)

Those in UP Manila estimate that PGH needs P4 billion a year to run smoothly, a “Harvard like institution” and at least P1 billion is for CO alone to improve or replace many of its dilapidated facilities.  

There are two moves being proposed. One is to double PGH annual budget and two, PGH should have a separate budget from UPS budget.

I suggested that there should be similar effort to pressure the Manila City government to contribute to PGH regular funding. I think it is safe to assume that about one-fifth of PGH’s patients, confined and outpatient, are residents of Manila City.

The City of Manila government does not feel it has any responsibility over PGH funding as it also finances about six city-owned hospitals, like Ospital ng Maynila , Ospital ng Sampaloc, Tondo General Hospital, Sta. Ana Hospital.

This is not correct. The city government has "no responsibility" but "has privilege" or "has right" to use PGH for its residents. Right without responsibility is a good formula for free riding and citizen irresponsibility.

A better option for the city government would be to sell or privatize one or two of its six (?) city hospitals, get the money and contribute to PGH regular funding.

This practice by national government agencies to subsidize Manila-based facilities and give Manila-based residents various subsidized or free services contribute to more congestion of Metro Manila. People in the Visayas, Mindanao, Bicol or Ilocos regions have no PGH but they contribute to the annual budget of PGH. They do not have MRT or LRT but they contribute to the annual subsidy of LRT and MRT. So many people from the provinces jump to Manila, partly to enjoy these freebies that are not available in their provinces and cities.

If the Manila City government will not contribute to PGH funding, PGH should NOT get budget increase from Congress. Instead, Congress-appropriated budgetary hike for healthcare should go to existing big DOH hospitals in Mindanao, Cebu or Iloilo, Bicol, Ilocos, Cagayan regions. Make these region-based hospitals become more modern, in infrastructure and health professionals’ training and specialized services. This way, the old practice of national agencies (UP, DOH) favoring Manila-based residents and contribute to further Manila congestion will be corrected.

Someone suggested that my above proposal does not and should not apply because of health insurance portability principle, that national taxes should apply to everyone. If we are to follow this logic, then it should be fine to have 3 or 5 more PGH in Manila City alone, and if funds for healthcare in other cities and provinces are not sufficient, public hospitals there can be closed down, anyway the people can go to the many PGH system in the city of Manila alone.

Any increase in public health should go to one regional or big island hospital -- in the Visayas, Mindanao, Bicol, Ilocos, or Cagayan region. Any significant increase in PGH funding should come from the Manila City government and from private donation, what Atty. JB Baylon is doing to raise funds for the PGH Medical Foundation through the "I am a Person Giving Hope (PGH)" campaign. Many showbiz, basketball stars and corporate individuals are supporting this cool initiative.

There should be more civil society and corporate involvement in increasing PGH funding, it should not rely on more national funding. Once again, the Manila City government must contribute to PGH annual funding as the hospital is serving many of its residents and voters.

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See also:

UHC 17: First, Second and Third Lines of UHC for the Poor, July 30, 2013 

UHC 18: DOH Budget, Healthcare Deregulation and PharmaWealth, August 08, 2013 

UHC 19: Health is a Right, Health is a Responsibility, September 19, 2013 

UHC 20: Health Equality Will Never Happen, September 20, 2013

EMHN 9: Private Sector Role in India UHC, April 10, 2013 

Generic Drugs 4: DOH Generics Summit 2013, October 04, 2013

Negros Occidental, Part 3

Bacolod City -- Arrived here yesterday in the provincial to attend the wedding of my beautiful niece, Nessa Oplas-Sy. This morning, I went to my hometown, Cadiz City to see again my parents, took some photos.

Out of the 84(?) provinces of the Philippines, I think Negros Occidental has the most optimal land use. One will hardly see even half-hectare of idle land. Cities, housing villages, coconut, banana, tree farms and sugarcane farms. Lots of it, Hundreds of thousands of hectares of sugarcane farms.

A transloading station of sugarcane trucks in Manapla, about 45 kms. north of Bacolod. The canes are unloaded from 6- or 10-wheeler trucks, weighed, then transferred to 18-wheeler trucks, to be brought to sugar centrals for refinery..

The province is the "sugarcane capital" of the Philippines. Its neighbor, Negros Oriental, has lots of sugarcane farms too, but not as extensive as those in the Occidental/east side.

Another transloading station near Caduhaan, Cadiz City.

There are lots of criticism about the sugarcane-dependent economy of the province. Some are valid, some are not. While it is true that huge tracts of land are owned by a few families, there are plenty of small land owners too, those who own from one to five or seven hectares.

With a huge population, more than two million people as of the 2010 census, more and more sugarcane farms are converted into wide residential and commercial areas.
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See also:
Provincial notes 1: Negros Occidental, April 25, 2011 
Provincial Notes 2: Sugarcane Economy of Negros Island, March 23, 2012

Energy Econ 6: Intolerance in Anti-Coal Hysteria, Cadiz Coal Project, September 17, 2012.

Nepal and its Maoist Government

* A guest post from a friend in Kathmandu. Robin is a co-founder of Samriddhi, The Prosperity Foundation (http://samriddhi.org/), a free market think tank in Nepal. He was featured in the June 2013 issue of Business 360, Nepal's free market leaning monthly business magazine where I also write a column under "Free Market".
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Nepal’s new mandate for the Constitution Assembly

Robin Sitoula

03 December 2013

Nepal has been a part of an elongated political transition for nearly half a decade now. Following the Nepalese Civil War (1996-2006) monarchy was abolished and the Unified Communist Party of Nepal (Maoists) emerged as a major mainstream political party from the first ever Constituent Assembly (CA) election held in 2008. After the first CA failed to deliver the constitution in May 2012 and got dissolved, efforts were made to create a multiparty government. But the political negotiations where the Maoist party exercised much influence (Dr. Baburam Bhattarai from UCPN (Maoists) still being the Prime Minister of the caretaker government) led to the formation of a technocratic electoral government in March 2013. In the meantime, a hardline faction split from UCPN (Maoists) in June 2012. The split faction led by Mohan Vaidya later opposed the second CA elections held in November 2013 and even used violent means, such as bombing, to deter the political parties and citizens from participating in the elections.

Amidst ambiguity and confusion regarding the electoral technocratic government, led by Chief Justice Mr. Khil Raj Regmi, the second CA election was initially announced to be held in November 2012. Despite speculations to the contrary, the elections were held in a largely free and fair manner on November 19, 2013. With a voter turnout of over 75% (in the face of violent obstructions and national strike by the hardline Maoist faction) and deemed free and fair by almost all national and international observers, the results of the election has left a huge majority of people and analysts shocked, especially the Maoist party itself. With the results of both first-past-the-post voting and proportional representation, it could be said that Nepal’s politics has moved marginally towards right where Nepali Congress, the country’s oldest political party and considered to be fairly centrists have won around 34 percent of CA seats. Similarly, The Communist Party of Nepal (Unified Marxist-Leninist) has come in second with around 30 percent seats. Despite their party’s name, the Marxist-Leninists are considered only slightly left of the center in Nepal. The Unified Communist Party of Nepal (Maoist), the dominant Communist party, secured only around 14 percent of the seats, which is a small fraction of its previous share of 37% in the 2008 CA election. The conservative party with monarchy and Hindu nation still on their agenda won around 4 percent of the seats whereas other parties considered left of the center constitute around 11 percent of the total CA seats.

  

The Unified Communist Party of Nepal –Maoist (UCPN-M), which was the largest party in the last CA and other Madhesee parties-- with predominance in the southern belt in the2008 election-- who lost several seats do not seem to be happy with the results. They have been claiming that the elections were rigged and it should be ‘re-evaluated’. UCPN- Maoist has gone to the extent of announcing that the party will not participate in the CA process if the results are not revaluated. This is seen by many as yet another tactic to divert the agenda from the Maoist Sumpremo Prachanda’s failure as a party leader and to ensure their larger participation in the CA despite the hard hit loss.

Looking at the current mandate of the largest (but still not enough to 51% majority) party in the CA, Nepali Congress should lead the government in coalition with other parties and also lead the process of constitution formulation and promulgation. The CA needs to finalize the constitution within two years and run the government of the next four years. Nepali Congress has had the reputation of being a pro economic liberalization party. However, power conflict and personality clashes and rifts within the party are very strong, as seen in the past. This kind of political bickering can already be seen within Nepali Congress and CPN-UML. Yet people of Nepal are anticipating a new government will be sworn in within a month’s time. Nepali Congress, as a mandated leader of this process has been making public statements that it would work towards creating a bi-partisan consensus government in this leadership. But the possibility of a bi-partisan consensus government seems bleak. In a case like this, the best likeliness is that the largest two parties -Nepali Congress and CPN-UML- will form a joint government. If this scenario works out, many expect a fairly stable political situation and possibility of a constitution actually being promulgated within stipulated time period. However, the strategic steps of the UCPN-Maoists will be critical to the overall process. As the political discourse has been shaping every day, it is yet premature to predict what the UCPN (Maoists) will settle with. Will they accept the mandate of the elections and adhere to the accepted democratic norms, or will they come up with new non-democratic stunt to win political strength? That is yet to be seen.

(Note: The percentage of parties’ representation in the CA (mentioned here) is calculated without considering the 26 seats that will be nominated by the new cabinet of Ministers and will be added to the current 575 CA seats to form the full assembly of 601 members).

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See also: 
Busiiness 360 1: Nepal and the Philippines, November 26, 2012 
Business 360 4: Brownouts and Power Deregulation, February 26, 2012

The Pope and Capitalism

A friend from UPSE alumni association, Mike A. wrote me in our SEAA yahoogroups and asked my views on   Pope  Francis, as  he  has  made a critique  on the Free  Market  ideology, and the Social Darwinian "survival of  the fittest" philosophy. Below is portion of a news report from theblaze.com.

Pope Francis Made Some Pretty Big Comments on the Global Economy: Here’s What You Need to Know

Nov. 26, 2013 1:26pm  By  Becket Adams

Pope Francis rebuked the culture of profit at any cost as he issued a 224-page mission statement for his papacy Tuesday, saying that mankind is called first to care for his neighbor and the poor….

The document also denounced the survival of the fittest theory of economics “where the powerful feed upon the powerless” and the poorest in society are excluded….

Unsurprisingly, as is the norm for this particular pontiff, some media outlets chose to present Francis’ words as an attack on yet another traditional pillar of “conservative” ideology: the free market.

Today Pope Francis blasted capitalism as "the new tyranny" that "kills" people.

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Well, a religious argument is based on faith, on belief and morality not so much on hard facts. No one asks for graphs, charts, tables and regression analysis to believe that a God exists, people just believe and have faith in a God.

To disappoint some people’s obsession with central planning and critique of free market, now invoking the Pope to strengthen their weak and lousy belief, here are some quickies.

1. The free market system, the capitalist economic system, gave us yahoo, yahoogroups, google, facebook, youtube, twitter, linkedin, Samsung, Apple, iPad, HTC, Starbucks, McDo, Mang Inasal, Aling Karing Carinderia, Toyota, GM, BMW, Vespa, Suzuki, Shimano bikes, etc. They are all useful. If people do not find any of them as useful, then they don't use or buy it. There are still people in fact who don't have facebook until now, it should be fine, no one coerces them to get one. In addition, no one was also coerced via taxation to finance the start up of those private enterprises.

2. The non-free market, the non-voluntary exchange, the force and coercion sytem, gave us what? Thousands of bureaucracies, local-national-multilateral, and tens or hundreds of thousands of central planners, very often their plans contradict or duplicate the plans of other bright boys and bureaucracies. 

There is also "state capitalism" where an institution of coercion tries to enter the world of voluntary exchange. But such state capitalism is possible only via rule of men, not rule of law. Certain requirements and polices on taxation, business registration and other regulations that normally apply to private enterprises do not apply to government- or state-owned enterprises (SOEs).

3. "Survival of the fittest" economic theory is a wrong term. The appropriate term is "expansion of the efficient" and "non-expansion of the inefficient", or Yes, “bankruptcy of the inefficient.” Mr. A puts up a bakery shop in a corner lot, it was doing well initially. Then Mr. B and Mr. C also put up a competing more glitzy, more fanciful bakery shops nearby and draw in many customers of A. Does this mean the death, non-survival of bakeshop A?

Maybe yes, but maybe No. People are rational, they innovate and adjust as much as possible. Those who do not adjust and innovate are likely to go bankrupt. So bakery A can focus on cheaper (and smaller) pandesal at P1 per piece while B and C sell fancy pandesal at P3 or more a piece. They serve certain markets, certain consumers, over the same locality, and they can all survive, no one dies. Instead of A prospering to become a big bakery shop, it just retained its small size in that area, and can plan an expansion elsewhere, in another village or municipality where it can innovate in its products, pricing and marketing.

Market segmentation, product and pricing differentiation. These are the key for enterprise innovation, market competition and economic freedom. Even people who took Economics for their college degree forget their Econ 102 or Micro Economics course. They may consider reading old books on microecon, or have a sit down in one undergrad lectures at UPSE.

Instead of listening to the Pope on economics, perhaps people should consider listening to undergrad lectures at UPSE or other universities. They will learn more. But if they want to hear stories for enrichment of the soul, then they should listen to the Pope.

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See also: 

Welfarism 26: John Mangun on Economic Decline of the West, July 31, 2013 

Inequality 16: Inclusive Growth and Central Planning, October 21, 2013 

EFN Asia 32: Day 2 of Conference 2013 in Bangkok, November 09, 2013

Fat Free Econ 49: Growth Amid Storms

* This is my article yesterday in interaksyon.com, TV5's news portal.
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MANILA - By storms, we refer not only to natural typhoons and widespread flooding, but also to political storms that hounded both the Legislative and Executive branches due to the prolonged pork barrel scandal in the third quarter this year. It remains surprising therefore that the Philippine economy was able to grow by seven percent in the third quarter. 

In the first three quarters of this year, the Philippines' gross domestic product (GDP) has grown so far by 7.4 percent. Gross national income (GNI) -- previously called gross national product (GNP) and includes income by Filipino nationals abroad minus income by foreigners in the country -- grew by 7.3. Net primary income (NPI) or net factor income from abroad (NFIA) grew by 6.7 percent.

Growth in per capita GDP, GNI and household final consumption expenditure (HFCE) are also shown below. All tables were taken from the National Statistical Coordination Board (NSCB) presentation titled Performance of the Philippine Economy, Third Quarter 2013, except the table from The Economist.

Compared to the growth of other emerging economies, Philippine growth figures are indeed high, next only to China.

And if compared to the industrialized countries, the Philippines’ GDP growth figures should be an object of envy of many European economies. The Euro area is projected to sustain its economic contraction by an estimated 0.4 percent this year, according to The Economist’s poll. Japan and the US are expected to have modest growth of 1.9 and 1.6 percent, respectively.

Source: The Economist, November 23, 2013

Where did fast growth come from? 

Computation of GDP or flow of goods and services yearly is made through the supply side (major industries) and the demand side (major consumers) of the economy. Let us take the supply side growth contributors first.

Agriculture, hunting, fishery and forestry (AHFF) showed a near-flat performance with just 0.3 percent growth last quarter over its year ago level. Huge growth was contributed by the industry and services sectors, growing by 8.2 and 7.5 percent, respectively.

But in terms of share to total GDP, the services sector is the biggest, followed by industry. So that in terms of percentage contribution to the seven percent GDP growth, more than half of it, 4.4 percent, came from the services sector.