Makati Business Club sees `danger signals' for RP in 2000

The country's top businessmen see "danger signals" for the economy this year despite the recent changes in the Estrada administration and the temporary shelving of a plan to revise the Constitution.

The Makati Business Club (MBC), in its latest Executive Survey Outlook, was cautiously optimistic about the economy and expressed concern over the "absence of a clear agenda and flip-flopping decisions" on key political and economic issues.

"These are the words used by the executives themselves," said MBC executive director Guillermo Luz. "When we asked them for what worries them most, we allow them to state in their own words - which makes this result very stark and significant."

The Makati businessmen expressed guarded optimism that the economy has finally bottomed out but there were still danger signals especially in governance. The MBC also predicted a hike in inflation and interest rates and a plunge in the peso this year.

In the MBC's review of 1999 and forecast for 2000 released earlier, the group said the economy measured by gross national product (GNP) was expected to grow by 3.5 percent while gross domestic product (GDP) was projected to grow by 3.2 percent.

The survey, which is conducted every six months, covered the period before January's Cabinet revamp but Luz said the sentiments still lingered despite the sector's willingness to give the administration a chance to prove itself.

According to the survey, two-thirds of business executives believed that the economy would grow in 2000 compared to 1999, to be propelled by an anticipated growth in corporate performance and the continued expansion of exports.

"It is significant to note that businessmen are actually more optimistic about their own companies than the economy in general," Luz explained. "The crisis has forced companies to tighten up cost management, productivity and efficiency."

The survey indicated that over 71 percent of business executives expected growth in corporate revenues compared to only 52.5 percent in 1999, and 67.5 percent expected growth in net income this year compared to only 41.7 percent in 1999.

On the other hand, executives also expected reversals in inflation, interest rates and foreign exchange rates in 2000. Unlike last year's survey results, the majority of the businessmen were now projecting a rise in inflation and interest rates and a depreciation of the peso in the next 12 months.

According to Luz, executives were markedly wary of the Estrada administration's flip-flopping on key political and economic issues as well as the absence of a clear agenda that would propel the economy.

There was also concern over rising cronyism, graft and corruption and the divisive effects of the President's initiatives for constitutional amendments.

Despite the recent Cabinet reshuffle, Luz said businessmen listed their top three concerns as graft and corruption, leadership and direction, and the peace and order situation.

The MBC survey also covered government performance over the six months from July to December 1999, with the Bangko Sentral ng Pilipinas still topping the list with a net rating of 87.5 percent, followed by the National Economic and Development Authority (NEDA) with 69.2 percent satisfaction rate.

The Department of Finance (DOF), however, plummeted from its third position down to 10th with a satisfaction rate of 51 percent while former Finance Secretary Edgardo Espiritu was at the helm.

Luz explained that it made a difference to business executives who was running a particular line agency. The Supreme Court, for instance, rose from eighth to fifth place with a satisfaction rate of 62 percent since the appointment of Chief Justice Hilario Davide.

"Rightly or wrongly, the DOF may have been a source of conflict within the economic team," Luz pointed out, adding that the endless debates over investments incentives were a case in point.