How reforms helped the Philippines transform into tiger cub economy
to improve economic growth and peace have started to attract the attention of investors looking for better business opportunities.
The Philippines was also active in the international scene. Aside from the various working visits of the President to showcase the country, the Philippines was also active in international organizations including as a member of the World Trade Organization (WTO) which focused on the liberalization of trade in the global market. The WTO replaced the General Agreement on Tariffs and Trade where the Philippines was also a member.
However, the journey towards the growth and stability enjoyed at the time was not easy. The country had to address various problems ranging from a power crisis to inadequate infrastructure, an ineffective tax system, highly monopolized industries, and need for peace and stability.
POWER CRISIS
First on the list was the need to address the power crisis that was crippling the country with hourslong power outages that affected industries and the Filipinos’ everyday life. Rotating brownouts lasted about four to 12 hours daily.
In his first State of the Nation Address in 1992, Mr. Ramos asked Congress to pass legislation creating the Department of Energy to oversee the country’s power sector. Aside from Republic Act 7638 (Department of Energy Act of 1992), Congress also gave the President special emergency powers to resolve the power crisis.
To address the power outages, the administration issued licenses to independent power producers (IPPs) to build power plants and signed supply contracts which guaranteed that the government would buy the power produced by the IPPs. The prices were pegged in US dollar denomination to attract foreign investment in the sector. Unfortunately, when the peso devaluated by almost half its value due to the Asian financial crisis, the contracted prices skyrocketed and created a problem for government.
INFRASTRUCTURE DEVELOPMENT
Laying the foundation for more businesses to come in, the government went into infrastructure development addressing concerns on the lack of adequate infrastructure needed for economic growth.
In order to gain infrastructure financing, the government encouraged private sector investment through the Build- Operate-Transfer (BOT) program where private businesses would undertake projects — such as tollways, light rail transits, power plants and airports, operate these to recoup their investments, and then turn over ownership to the government.
Among those under the BOT scheme at the time were the Phase III of the