To be honest, I never really paid much attention to the State of the Nation address of the Presidents. The last administration’s SONA were full of ambiguity and questionable claims. Lately, the SONA of President Noynoy has been something I have been paying attention to and for the first time in decades, I actually listened to it live as it was happening. I’ve actually participated in the SONA this year by posting some of my thoughts through my twitter account (@randelltiongson).

It was nice to hear the accomplishments of the President for the year that has passed and I am eager to see many of the plans unfolding which will bring the country to a better situation and environment. There are many things that this present administration that needs to be addressed and with only 3 more years in his term. the President must accomplish much.

There are many gains in this administration and there are 2 giant accomplishments that  this administration has been able to accomplish – a drastic reduction of systemic corruption (still far from ideal) and our investment grade status. The nation’s economy has been on an over-drive and it’s about time. Inclusive growth however, seems to be still elusive but I am realistic enough to know that it will take a long time. What I like with this administration is that he seems to be genuinely sincere in leaving a better government for the the next President, like history repeating itself.

Many things needs to be addressed still such as generation of more jobs and better jobs at that. Only when we can have more and better employment can we really say that there is inclusive growth.

I am hopeful for the next 3 years of this administration but even the President understands his limitations. It is my belief that we need to support the President in his reforms and that we need to constantly pray for him and the nation. The Bible says “Blessed is the nation whose God is the Lord.” – Psalm 33:12, NIV

I’ve also asked the thoughts of my friend Dr. Alvin Ang, President of the Philippine Economic Society and this is what his views are:

“PNoy’s 4th SONA is a Call for Contribution. ‘Makiambag sa Solusyon.’ There are no direct allusion to the economy except that there are current efforts though not seen that are happening such as job creation in technical skills and the exportation of rice.”

“Infrastructure that are correctly priced and of quality are the order of the day. They may be causing delays but transparency will make sure that things are right. Overall, the warning about those who continue to defy the Matuwid na Daan is an admission that overall change takes time.”

“This President indeed means business and he is doing things navigating through the democratic process. This is great encouragement for me as a Filipino.”

Let us pray as a nation for the nation.

It is an honor to present the outlook of one of the columnists & analysts I truly admire. I have been a reader of his column for many years now and his views are those I truly respect. Mr. Mangun has an uncanny in the accuracy of many of his forecasts.

The 2013 Outlook of John Mangun

There was a significant event in 1997 called the Asian Financial Crisis. The Philippines came through that better than the others because: 1) The economy was not export oriented, 2) The banking system was strong, and 3) The Bangko Sentral did not artificially value the peso pre-crisis.

All those same factors apply today even with the BSP’s current peso intervention. That is why the Philippine economy will continue to outperform as will the stock market.

The reasons are twofold and those factors are not going to change.

Interest rates are so low as to create a negative net return. The Philippines has always been a high interest rate economy in comparison to our neighbors. With low rates, the only available liquid investment is the stock market. The other markets have always priced low rates into stock prices; not so here. Interest rates will stay historically low. Further, low rates allow easy borrowing for economic development.

None of our neighbors stock market listed companies are making the kind of profits as here. Philippines companies are leaner (low debt) and meaner (sensible but aggressive expansion) and therefore have long term sustainable and growing profitability.The PSE index will go to 6,900 as corporate profitability continues. The economy will show sustainable growth as corporate profitability continues.

The Peso will move counter to the US dollar which will see a large depreciation mid-year to near year end.

2013 is the year of the Philippine Eagle, not the Chinese Snake.

Interest in the stock market first hit John Mangun when he was in his early teens, following the stock price action of major companies in the daily newspaper long before the computer.

In 1976, Mr. Mangun earned his license as a stock broker on the New York Stock Exchange as well as being licensed and registered for the Options and Commodity markets.

After working for two major Wall Street firms, Mr. Mangun went to England as head of foreign exchange trading for a British asset management company.

Upon his return to the United States, he formed his own investment advisory company administering to the investment needs of corporations and high-net worth individuals.

Mr. Mangun has actively analyzed and traded the Philippine Stock Exchange since 1989, making his first stock purchase (and losing trade) buying shares of San Miguel Corporation on Friday, November 24th, one week before the 1989 coup attempt.

He has been a regular newspaper columnist, writing about the Philippine economy, business, and stock market since 1996. His website is MangunOnMarkets.com.

Question: Our economic fundamentals showed a lot of improvements lately—credit ratings upgrades, BSP rate cuts, lower inflation rates and stock market all-time highs. But it seems Juan dela Cruz doesn’t feel these improvements yet. The poverty and unemployment rates are still high according to news. How long will it take for our poor kababayan to feel the said improvements in our economy?

—Leo Manalaysay via Facebook

Answer: With all that we see and hear about the growth of the Philippine economy, there is real reason to be very optimistic about the future. I share the view of many that the Philippines will be among the most prosperous nations in the near future, all in God’s time.

Economic growth ushers many positive changes and if the government and the business sector will properly manage growth, the benefits will ultimately trickle down to the masses. Economic growth can manifest in different ways but not all of them will have the desired effect. Some growth can be unsustainable and without sound fundamentals. Managing the economy through growth can just be as tricky as managing it through recession. A properly managed growth should be able to create a healthier business environment that will generate more employment and more taxes, and should be sustainable. As more jobs are generated, our kababayans will be able to experience better income opportunities, lower unemployment and underemployment. It is through better employment that economic growth can really trickle down to the masses.

The big issue is when. Typically, it takes time before all the benefits of economic growth can be felt, and business and the government will be the main drivers. Unlike in the stock market, where a report on economic growth can cause an overnight spike in the bourse, it takes time before business can actually experience the gains.

A corporation will want to perform adequate study before going into an expansionary phase, ascertain first if current capacity can accommodate the growth in demand for its products or services.

Companies will not immediately go into hiring more employees because it will need to ensure that the new hires will actually contribute to a better bottom line and not the other way around. Businesses need time to expand as they would still have to raise more capital, study trends and build capacity.

There must be some effects in a year or two, but not in a quarter or two. Will the effects be felt by the masses? Only if growth will result in increased employment.

Another concern is, how ready are we for the change? While many of us will benefit from the growth, how we benefit will differ from one individual to another. Some individuals will use this as an opportunity to save and invest more money that will open more opportunities for wealth accumulation and long-term savings. However, some may opt to use the income improvement for short-term wants and a lifestyle upgrade– when we do so, we will miss the opportunity to have a better quality of life that is sustainable.

While waiting for positive changes to trickle down to us, it is best that we remain prudent with whatever we have. If we can manage the little we have now, we will also be able to manage our resources when they get bigger.

“If you are faithful in little things, you will be faithful in large ones. But if you are dishonest in little things, you won’t be honest with greater responsibilities.” —Luke 16:10, NLT