MANILA, Philippines — Former Bangko Sentral ng Pilipinas (BSP) governor Amando Tetangco Jr. has been awarded the Arangkada Philippines Lifetime Achievement award by the Joint Foreign Chambers (JFC) of the Philippines.
The Arangkada Lifetime Achievement Award recognizes individuals of any nationality that have lived and worked in the Philippines for 25 years and have contributed significantly to improving the country’s business environment.
JFC said Tetangco was chosen as this year’s recipient given his accomplishments as central bank governor which played an important role to the foreign investment community.
Among these accomplishments include managing inflation, the exchange rate, and the debt burden highly effectively, achieving record levels of reserves exceeding $80 billion, making reforms to increase the foreign banking presence in the Philippines, raising confidence of rating agencies to give investment grade ratings, and emphasizing financial inclusion and financial education for young people, among others.
“Being BSP governor is a role that had many challenges but one that I will always cherish. I feel very honored and also humbled to have been given the opportunity to serve in that capacity,” Tetangco said.
“Now that my term at the BSP has ended, I look forward to the work exemplified by private sector organizations like the JFC that proves public service is not a monopoly of the government.
The private sector has a tremendous role to play in improving people’s lives. I will constantly bear this lesson in mind as I move on to this new chapter of my life as a private citizen,” he added.
What do we need to advance this country over the long term?
As we espouse in the Stratbase ADR Institute, the administration needs to take a strategic perspective in governing—a perspective that balances short-term needs with long-term requirements, and that looks at ways in which the different gears of the economy function together. In advocating this holistic view, we are happy to work with and participate in the initiatives of other civil society and business actors that are doing their part to encourage the government to take big steps forward across society.
The recently held Arangkada forum, hosted by the Joint Foreign Chambers, is one such initiative.
In other columns, we have looked at the importance of injecting dynamism into the investment environment and of monitoring the plans for the nationwide infrastructure drive called Build, Build, Build.
In this article, we focus less on ‘big-ticket’ works that, if implemented, could have an outsize impact on the economy, and more on shoring up key sectors that are fundamental to the future wellbeing of this economy. One good example is the education sector and the Philippines’ human capital.
Preparing the Labor Force
With technological advancements, new jobs are created at a faster pace than before. By some estimates, around 65 percent of children who enter primary school today will end up working in jobs that still do not exist—even jobs that we have not even imagined.
To come to terms with this reality, we have to break down some of the walls that make us think that high-technology careers are niceties for the future, instead of a certainty that we should be managing even in the present. This reality means that we should already be equipping our children with technology skills that will help them to compete in the future marketplace—and, in doing so, we will help to avoid some of the potentially adverse effects of disruptive technologies.
The World Economic Forum’s 2017 Human Capital Report puts the Philippines in the 50th place out of 130 countries. The report revealed that the Philippines fared poorly in ‘deployment’, an indicator that covers people’s accumulation and application of skills in the workplace.
In the same vein, the Labor Force Survey shows that while unemployment and underemployment are slowly improving, they still remain high. In particular, underemployment, at 16.3 percent in July, reveals that people are seeking more work and better jobs.
However, several business groups have complained about the lack of skilled labor, again highlighting the disconnect between labor’s demand and supply. This only further shows the urgency of adapting the way that we train and capacitate our workforce.
During Arangkada’s panel discussion on Human Capital, a representative from the IT sector shared that to remedy the skills mismatch, several IT companies have taken the initiative to build relationships with the academe, providing teaching-training and helping design the curriculum to fit industry needs.
This should be a welcome move for students and their families, who will have a better shot at getting and excelling in good jobs after they graduate. This move could be extended to other sectors as well, as our industrialists can take proactive steps to ensure the next generation is ready to take on technical roles.
Beyond the technical side, however, it should go without saying that soft skills continue to be crucial. Some of these skills, like adaptability, will be especially important for an information-charged world. Others, like integrity and good interpersonal communication, continue to be prized for keeping organizations—whether government agencies or businesses—running smoothly.
Arangkada recommendations for education
An Arangkada publication, distributed during the forum, outlines the group’s list of recommendations for the government’s attention. There are several recommendations, many of which are already present in some of the government’s planning documents. In support of further improvements to the education sector, here are nine recommendations (taken directly from Arangkada) that have not yet been integrated into the government’s plans:
Commit to an increasing public education budget of 4% of GDP. Double the average spending per studied (from 2010) to be closer to other ASEAN economies.
Narrow the skill-jobs mismatch by revising curricula and training and retraining the workforce for hard-to-fill jobs of the present and future economy. Support greater interaction between TESDA and the private sector.
Empower teachers by constantly improving their quality and curriculum to help students acquire the knowledge and skills required to enable them to get higher quality jobs. Apply competency based-standards for teachers and provide more in-service training, while maintaining their welfare and morale
Basic education and college curricula should increase study of science, technology, and math subjects
Encourage more college students to study fields needed for specialized positions (e.g. agribusiness, computer science, engineering, environmental science, mining, and physics). Tech more foreign languages in colleges to support the BPO and tourism sectors
Intensify investment in technology for public education. Complete the connection of some 7,000 high schools to the internet. Equip high school teachers with notebook computers and students with e-readers. Place internet-connected computer labs in elementary schools
Resolve administrative barriers (importation fees) to the donation of used computers by PEZA locators to the education sector. Hundreds of thousands of units could be given to help students learn essential computer skills
Change laws and rules to allow qualified foreign schools to operate and foreigners to teach in the Philippines.
Strengthen the Dual Education/Dual Technical System by expanding scholarships and involving the private sector in the curriculum development and internships.
The Arangkada forum tackled many other issues, including industrialization, logistics, and agribusiness. If we had to choose a universal theme from the conference, however, it was the importance of forging partnerships and strengthening communication across different stakeholders, including the academe, the public sector, and the private sector, to bridge existing gaps and identify areas for reforms and cooperation.
Thinking Beyond Politics by Victor C. Manhit | September 20, 2017
In the medium term, the government is aiming to reach an annual GDP growth of between 7% and 8%. These rates are higher than we’ve seen in recent years, but our officials are optimistic. At the sidelines of the recent Arangkada business forum, Socioeconomic Planning Secretary Ernesto Pernia assured us that these rates are achievable, particularly when the current restrictions on foreign investments are lifted. While listening to the presentations, it seemed as though all our economic officials are similarly bullish for what they can accomplish.
NEW DYNAMISM IN THE INVESTMENT ENVIRONMENT?
At present, the government is reviewing the foreign investment negative list (FINL), which is the official list of sectors where foreign participation in excluded. Revised every two years, this round is the first time that the administration will have a hand in deciding where foreign investment is welcome.
By all accounts, this government is taking a more liberal approach than its predecessors.
At a different event, Secretary Pernia even shared that he had sent the initial draft of the 11th FINL back to the drawing board — deeming the first round of proposed changes too “puny.” This aggressive push is more than welcome for our economy, and Secretary Pernia’s statements are certainly an encouraging development.
The new list is expected to be released sometime in the next quarter, as the next draft will still have to be presented to the NEDA board for approval. According to Secretary Pernia, the sectors that he aims to open for foreign inclusion are: retail trade, professions, public utilities, and contractors. Some of these sectors are also expected to liberalize in line with the rest of the region as part of the ASEAN Economic Community.
As important as it is, liberalizing the investment environment is only one step to attracting more investment in the country. Deeper reforms are needed if we are to propel our economy to greater heights. Which reforms are necessary to improve our country’s competitiveness and foster an even more dynamic investment climate? These were the questions tackled during a recently held forum organized by the Joint Foreign Chambers, called “Arangkada Philippines: Implementing the 10-Point Agenda.”
Arangkada is a Tagalog word that translates to “accelerate,” a term that aptly captures the pace of our economy’s expansion over the last few years. While the previous administration made significant strides in fueling our economy, it fell short in achieving some of its growth and development targets. President Duterte and his team are capitalizing on these shortcomings.
Even before Duterte gave his oath of office, his economic team had already laid out its 10-point socioeconomic agenda. The speed with which it had declared its objectives reflected the administration’s obvious commitment to bringing about swift and impactful reforms — reforms that have to be implemented if we are to turn our ambitious targets into reality.
For those who were not able to make it, the Joint Chambers have published their lists of recommendations, covering macro-economic reforms, competition, infrastructure, rural development, human capital, poverty alleviation, and science, technology and the arts, in the conference proceedings.
BRIDGING THE INFRASTRUCTURE GAP?
The decrepit state of the country’s infrastructure is often cited as the Achilles heel of our economic potential. Thankfully, with the launch of the Build, Build, Build campaign earlier this year, there is no discounting that infrastructure is a centerpiece project of our current leadership. As a result, there has been renewed interest in the infrastructure sector and in how the administration will accomplish its targets.
For its part, the Duterte administration has announced a list of priority infrastructure projects.
During the forum, it was encouraging to listen to our government officials talking about the big-ticket projects that they intend to break ground on or even complete during this term. These projects include the Japan-funded Mega Manila Subway and 13 bridges across the Pasig River, two of which will be built with Chinese grants. Given the state of our traffic situation today in Manila, all of these projects will be watched and waited for with great anticipation.
Yet, several of these projects are reboots from the previous administration — a sobering reminder that they had failed to advance despite years of gestation. As always, the devil is in the execution, not the planning.
While the government has promised to increase infrastructure spending, this should also be complemented with institutional and policy reforms. The approval of the National Transport Policy this year is a good step towards unifying all transport projects. The administration’s push to right-size the bureaucracy is also a welcome measure to address the fragmented institutional setup of various transport agencies. Over the long term, a mechanism should be in place to ensure policy continuity every time a new administration steps into office.
With great anticipation also comes great apprehension about whether the Duterte administration will be able to see its commitments through to the end and achieve them as planned. Thankfully, it has everything going for it: years of sound fiscal policy have afforded the government a wide-enough fiscal space to make these necessary investments. It would be a waste to let the best opportunity that we have had in decades slip between our fingers.
MANILA, Philippines — Businessmen are worried that the country’s “golden age of infrastructure” may lose its luster given the shortage in skilled labor in the construction sector.
For both local and foreign businessmen, the realization of the government’s ambitious “Build Build Build” program may take a hit, if such skilled labor supply tightness continues.
“If the economy grows, we do not have enough qualified people. Even the infrastructure, if you talk about it, there’s a shortage in construction workers, welders, and others,” Philippine Chamber of Commerce and Industry president George Barcelon said.
“We do already see the severe shortage in skilled labor. You find enough unskilled labor, but you find severe shortage in skilled labor. If we want to see just half the projects through that are in the pipeline, we cannot cover that with local talents alone because we need more people that understands the industry and will make it better,” European Chamber of Commerce of the Philippines (ECCP) president Guenter Taus said separately.
Real estate consultancy services firm Colliers International Philippines said the lack of skilled workers in the country is already causing construction delays in the private sector.
The Duterte administration is ushering in what is touted as the golden age of infrastructure through an aggressive infrastructure spending program.
Dubbed Build Build Build, the government will spend a total of P8.4 trillion or approximately $160 billion for infrastructure in the next six years.
For 2017 alone, the government allocated 5.4 percent of gross domestic product for infrastructure spending.
“If we want to grow at the rate that is forecasted, we need to look at sources of foreign employment in various sectors,” Taus said.
The ECCP has long been lamenting restrictions on international contractors in the country.
At present, foreign contractors in the construction industry operating in the Philippines can only hold 40 percent equity in businesses.
This, according to businessmen, makes foreign investors reluctant to bring in technology and capital into the country.
“Opening up of the construction industry serves many purposes. One, it provides you with the labor you may not have enough of. Second, it provides you with transfer of technology in some fields. And third, it also provides you with competition, it basically keeps costs down,” Canadian Chamber of Commerce of the Philippines president Julian Payne said.
Corporate Watch by Amelia H.C. Ylagan | September 18, 2017
Budget Secretary Benjamin Diokno and National Economic Development Authority (NEDA) Secretary Ernesto Pernia keynoted the Arangkada 2017 Forum on Sept. 14, when the Joint Foreign Chambers of Commerce and Filipino partners in business listened to economic opportunities in the near-, medium- and long-term.
“The Duterte administration will be different. We envision that by the time we step down in 2022, we would have ushered in the Golden Age of Infrastructure in the Philippines, an era that Filipinos will look back with affection as one that laid the necessary foundations for robust and equitable growth in the long-term,” Diokno said.
Sec. Diokno lamented the opportunities lost in the less than 2% of GDP of infrastructure spending from 1986 to 2016, which he said “reflected decades of neglect and misallocation of public resources.” He noted that “the suggested ratio for infrastructure spending as a share of GDP is 5% for developing countries.” Loud and clear, the “Build, build, build” program will reverse previous alleged “inaction” to high-gear “Spend, spend, spend” to stimulate economic development.
Sec. Pernia acknowledged past administrations’ accomplishments: “GDP growth has been on a sharp monotonic uptrend over the last three and a half decades. With a 6.9% GDP growth in 2016 — high end of the government’s target of 6% to 7% — the Philippines is poised to be one of the fastest rising economies in Asia over the medium-term.” Regarding the relative slowdown in the first two quarters of 2017 under Duterte, Pernia pointed out that this phenomenon seems normal, reflecting post-election-year effect on growth.
“The economy is also undergoing structural transformation — growth is increasingly being driven by investments vis-à-vis consumption, and is led by the industry sector relative to the service sector. In other words, sources of economic growth have broadened. Total factor productivity growth of the economy in recent years has been the fastest among ASEAN-6 countries at 3.3% for the period 2010-2014, and the highest in the group at 1.48% over the period 2010-2016” Pernia objectively said of the economic situation prior to “Dutertenomics.”
Pernia is confident that the economy is robust and sustainable, but he laments the inequality across households and regions, and the chronic poverty that persists amidst the glowing GDP numbers. “The country’s GDP remains concentrated in the Mega Urban-Industrial Region comprising the National Capital Region (Metro Manila), Calabarzon (Region 4A), and the Central Luzon Region (Region 3), which collectively accounted for nearly two-thirds of total GDP for the period. But the per capita income of NCR is almost triple the national average of P78,712 for 2016, while ARMM’s per capita income is now only 1/4 of the national average and 1/13th of NCR’s,” Pernia said.
“This is why we have identified infrastructure development as a priority of the Duterte administration,” Diokno emphasized. “We have to close the infrastructure gap soon if we are to realize our development objectives of becoming an upper-middle income economy by 2022 and reducing poverty rate to 14%. DBM is targeting at least 5% of GDP for infrastructure financing in the medium term; 5.4% for 2017; and 6.3% for 2018. In nominal terms, these figures translate to P858 billion and P1.1 trillion for FY 2017 and 2018, respectively.”
Diokno plans to finance this through an expansionary fiscal policy that first, increases the planned deficit from 2% to 3% of GDP. Second are the assumed increased revenues from the Tax Reform program. Combining the two expansionary measures, the government would generate an additional fiscal space amounting to P309 billion in 2018 and rising up to P524 billion in 2022, Diokno assumes.
But what if Diokno’s assumptions on revenue inflows do not actually happen? Would the brave swing to “Spend, spend, spend” from past “inaction” dent the “monotonic (boring?) uptrend of GDP” — the close to 7% GDP growth — acknowledged by Pernia?
The government will have to borrow more, that’s what it means.
Hopefully, the shortfall from unrealized revenues will not drive up long-term debt for future generations to pay for — we are still paying, until 2025, for the debts in Marcos’s martial law: “During the Marcos regime… many ‘successes’ were built on ‘debt-driven growth.’ While it is true that the regime embarked on an infrastructure spending spree, this was pursued largely to justify its existence and at the exorbitant cost of the ballooning of the country’s external debt (Rappler, 03.25.2016).”
And the spending of Marcos did not translate to higher GDP growth for him to brag about. “The economic setback due to the Marcos regime cemented our title as the ‘sick man of Asia’ for the good part of the past 3 decades, and prevented us from partaking of the so-called ‘East Asian miracle’ where by the time we recovered in 2003 the incomes of our neighbors had grown 2-4 times their 1982 levels (Ibid.).”
Many economists have warned that increased government spending does not necessarily stimulate GDP growth, and that the Keynesian recipe of “Spend, Spend, spend” (originally for the post-war economic rehabilitation) has lost flavor in the recent unpredictable, anti-cyclical booms and busts of financial and economic crises. Some even say that increased government spending can hamper economic growth, for the “crowding out” of the private sector, and for the politics that murk the decision factors for government intervention in economic planning.
Professor Emeritus of Law at George Mason University Gordon Tullock suggests that politicians and bureaucrats try to gain control of as much of the economy as possible. Demand for government resources by the private sector leads to misallocation of resources through “rent seeking” — the process by which industries and individuals lobby the government for money. Rather than spend money where it is most needed, legislators instead allocate money to favored groups. Though this may yield a high political return for incumbents seeking reelection, this process does not favor economic growth (mercatus.org, 06.10.2010).
A note to our present leaders and economic planners: Yes, we need roads and bridges, and other infrastructure. But when and if you decide to (over)spend on the “Build, build, build” hybrid PPP program, please be careful to study recent abundant analyses on the advantages and disadvantages of government spending as a stimulus to that much-desired GDP growth figure — make sure there is something to brag about in the end, as our economic history writes itself.
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
MANILA, Philippines — The Philippines can easily attract at least $10 billion in foreign direct investments (FDI) annually once existing restrictions and improvement on its overall competitiveness are addressed, the Joint Foreign Chambers (JFC) of the Philippines said.
JFC officials said yesterday while the country may be considered the “rock star of Southeast Asia” as far as economic expansion is concerned, it remains a laggard in terms of FDI due to several factors affecting its business environment.
“The Philippines should receive $10 billion a year. But what is preventing the country’s economy from running on all cylinders? Growth of business processing, manufacturing, and tourism have been high, but the growth of agriculture has been weak and mining has moved backward despite its high potential,” Japanese Chamber of Commerce and Industry of the Philippines president Hiroshi Shiraishi said.
“The really relevant criteria is how we are doing compared with our leading ASEAN neighbors such as Vietnam, Thailand and so on. Our target should be to have at least the ASEAN average in FDI. And we still have a long way to go,” Canadian Chamber of Commerce of the Philippines president Julian Payne said separately.
The country’s net FDI last year zoomed 40 percent to a new record level of $7.9 billion, surpassing the full-year target of $6.7 billion.
“The key point is how quickly the new administration can proceed with its stated intention to remove restrictions of FDIs. There have already been a number of initiatives,” Payne said.
In a new Arangkada Project publication released yesterday, the JFC outlined various recommendations on reducing cost of doing business and increasing competitiveness and ease of doing business in the Philippines.
“There was a lot of concern about the reputation impact of the extrajudicial killings. But most companies have realized that in most sectors, it hasn’t changed the day-to-day operating environment and most companies are pushing ahead,” Australian-New Zealand Chamber of Commerce of the Philippines president Tom Grealy said.
“The underlying economic management is good, and there is fundamental reform coming which will potentially set the Philippines up for the next 20 years, particularly the tax reform so it’s quite actually an exciting time,” he added.
With regard to tax reform, the JFC said concerns have been raised by its members over proposed provisions in the first TRAIN that could have negative effects on business process management, ROHQ, automotive, and beverage firms.
The group said some of these concerns were ameliorated in the House version of the new law, while others may be resolved in the Senate and the bicameral reconciliation process.
“JFC members support taxes that are more progressive than regressive, that incentivize individuals and corporations to work hard to produce income, save, and invest, that impose a significant burden of taxation on consumption, support investment and job creation, support needed physical and social infrastructure programs, and are collected fairly, fully, efficiently, and without corruption,” the group said.
The Philippines should catch up with Asean countries in terms of attracting foreign direct investments (FDIs) but foreign investors said this will depend on how fast government would be able to remove restrictions.
While the Philippines has broken out of its low level of FDIs – from $1.1 billion in 2010 to $7.9 billion in 2016 and h averaged $6.5 billion per year — – the number still lags behind Asean, according to John Forbes, chief of party of the Arangkada Philippines Report and senior adviser of the American Chamber of Commerce of the Philippines.
The Philippines breached the Arangkada target of $7.5 FDIs but the group will not set any new targets.
The Joint Foreign Chambers had said FDI should be targeted to exceed $10 billion and be measured in erms of jobs and exports generated.
Forbes said the group is not making an assessment of the Arangkada goals but said these have been updated to reflect the 10-point agenda of the Duterte administration and the Philippine Development Plan.
Julian Payne, president of the Canadian Chamber of Commerce of the Philippines for his part said the relevant criteria here is how the Philippines fares with Vietnam and Thailand.
But Payne said the key point is how quickly the administration proceeds to remove the restrictions on foreign investments.
There have been moves to lift foreign restrictions on public utilities as well as on construction. The Foreign Investment Negative List is also being reviewed.
“With these initiatives, it obvious FDIs will grow but to set a specific target is risky… it’s better to benchmark with the Asean average… (the Philippines is) clearly below it,” Payne said.
In 2015, the Philippines attracted $5.7 billion FDIs which pale in comparison with Singapore whose FDIs stood at $61 billion; Indonesia $17 billion and Malaysia and Vietnam with more than $11 billion each and Thailand’s $8 billion.
Ernesto Pernia, socioeconomic planning secretary, said he wants to “drastically shorten” the FINL and that he supports aggressive liberalization to be able to open up more business areas to foreign investors.
Pernia told reporters on the sidelines of the Forum the current draft is a long list and “ I want to really shorten it drastically.”
Pernia said areas up aggressive liberalization are retail trade, certain professions, public utilities, and contractors. “
The final form will be more aggressive, it will be closer to the Asean. There are many things in there they are not increasing it by 40 to 60 percent equity, I said bring it up to 100 percent for certain areas,” Pernia said.
Pernia cited professors, as one of the professions that will be likely removed under the FINL.
The Regular Foreign Investment Negative List, which was last promulgated by the previous administration in May 2015 through Executive Order No. 184, enumerates the investment areas and activities reserved exclusively for Filipinos as well as industries where foreign equity of up to a maximum of 40 percent is allowed, as mandated in the Constitution.
The review of the FINL issued periodically by Malacañang under the Foreign Investments Act of 1991 started in May this year.
The Duterte administration seeks to open up the economy by lifting economic restrictions in the Constitution, in order to open more business areas to foreign investors. Under the 2015 Negative List, 100 percent foreign participation is allowed only for retail trade enterprises under certain conditions specified in Republic Act 8762 or the Retail Trade Liberalization Act and also in the rice and corn industry under certain conditions. The 2015 list also allows full foreign participation in the exploration, development and utilization of natural resources through financial or technical assistance agreements with the President. — I. Isip. and A. Celis
MANILA – The Philippines should “drastically” cut the number of sectors and activities closed or limited to foreign investors to get more of the investment flows into Asia, the socioeconomic planning secretary said on Thursday.
Ernesto Pernia said that when he was given an initial draft of an updated “foreign negative list”, he sent it back for amendment because it was “puny.”
“I want a more aggressive liberalization,” Pernia told reporters on the sidelines of the Arangkada business forum organized by foreign business chambers.
The Philippines is one of Asia’s fastest-growing economies but it lags regional peers in terms of attracting foreign direct investment because of foreign ownership restrictions, high power costs and poor infrastructure.
Pernia said that among the sectors and activities targeted for opening or further opening were the practice of all professions, retail trade enterprises, ownership and management of public utilities and contracts for construction.
Since coming to power in June 2016, President Rodrigo Duterte has vowed to open up the economy and liberalize sectors such as energy, power and telecoms to make the country more competitive and give Filipinos better services and lives.
In terms of openness to foreign investment, “we have to be at par with other countries, no choice, otherwise we will continue to be left behind,” Pernia said.
Foreign direct investment hit a record $7.9 billion in 2016, central bank data showed, but the figure pales in comparison with those it has for Vietnam ($12.6 billion) Malaysia ($13.5 billion) and Singapore ($61 billion).
Investors have long been frustrated at being shut out of some sectors in a market of more than 100 million Filipinos, either squeezed by local monopolies or regulations that bar or limit foreign ownership in certain activities.
“The key point is how quickly the new administration is going to proceed with its stated intention to remove restrictions on foreign direct investment,” Julian Payne, president of the Canadian Chamber of Commerce of the Philippines told reporters.
“You want to at least have the ASEAN average (of FDI flows) and we still got a long way to go,” Payne said.
FOREIGN BUSINESS chambers in the country yesterday set the tone for engagement with the over one-year-old government of President Rodrigo R. Duterte, unveiling reform proposals under their continuing “Arangkada Philippines” initiative that was launched in 2010 at the beginning of the previous administration.
In their Sept. 14 annual report, titled: “Implementing the 10-point agenda” — referring to guideposts the current government has adopted in order to spur overall economic growth faster and reduce the ranks of the poor when it ends its term in mid-2022 — the seven members of the Joint Foreign Chambers of the Philippines (JFC) said this year’s recommendations were drawn from unfinished reforms in past “Arangkada” (accelerate) lists, the government’s own blueprint as especially contained in the 2017-2022 Philippine Development Plan, as well as inputs from the Philippine Chamber of Commerce and Industry, The European Chamber of Commerce of the Philippines “and other sources.”
The JFC said its “extensive menu of policy suggestions” is designed to ensure that “the Philippines will be rated in future years much closer to the other ASEAN-6 economies that it currently lags behind,” referring to bigger economies of the Association of Southeast Asian Nations.
The reforms are grouped under the topics: continuing the macroeconomic agenda; increase competition and the ease of doing business; infrastructure building; rural development; human capital development and reproductive health; science, technology, and arts; and poverty alleviation and social protection program.
Recommendations include various tax reforms, pushing the government “to double” gross domestic product (GDP) growth rate to nine percent (compared to 7-8% officially targeted up to 2022), “supported by a clear long-term industry policy”; growing merchandise exports by 15% a year (compared to 5-9% annually under official targets until 2022); strengthening delivery of microfinance and micro-insurance products and services; improving transparency and the regulatory environment; opening up further telecommunications, retail and public utilities; an aspiration for foreign direct investments to exceed $10 billion partly by making the Foreign Investment Negative List “more positive” by reducing restrictions; creation of independent regulators for railways, airports and seaports; improving the public-private partnership framework “to free up fiscal space,” speeding up power projects and drafting a renewable energy road map; mass transit systems for Cebu and Davao cities; reviewing the average effective tax rate for large-scale mining to make sure it is not more than what is imposed across Asia and the Pacific; increasing the public education budget to four percent of GDP; further revising curricula to narrow the skills-jobs mismatch; allowing foreign schools to operate and foreigners to teach in the Philippines; as well as reducing fertility rate to 2.1% in 2022 from 3.1% in 2015.
“I think at this stage, there is progress being made,” American Chamber of Commerce Senior Advisor John D. Forbes said in a press conference yesterday at the sidelines of the “Arangkada” report launch in Manila Marriott Hotel in Pasay City.
“But the question is: is it going to continue and increase the pace?”