Philippines could catch up with Asean neighbors

Published by rudy Date posted on April 1, 2011

THE World Bank and other development partners of the Philippines have expressed confidence that the newly unveiled 2011-2016 Philippine Development Plan (PDP) would spur economic growth in the country for the next six years.

It could also be a vehicle for the Philippines, which is lagging behind in economic development in the region, to catch up with its neighbors, particularly in Association of Southeast asian Nations.

Speaking to the participants in the recently concluded 2011 Philippine Development Forum, World Bank Country Director Bert Hofman said that renewed optimism and a strong trust of the Filipino people in President Benigno Aquino 3rd would help create an inclusive growth for the Philippines under PDP 2011-2016.

Hofman said that forum participants have lauded the Aquino administration for its commitment to fiscal responsibility, transparency and performance.

According to Hofman, the participants noted the strong growth posted in 2010, the timely passage of the first budget of the administration, and the priority given to the conditional cash transfers program and the household targeting system.

The Philippine economy performed strongly last year, growing by a 34-year-high 7.3 percent compared with just 1.1 percent in 2009. The 2010 growth rate was also higher than the government’s target of 5 percent to 6 percent for that year. For this year, the government is aiming for 7 percent to 8 percent GDP growth.

But the main challenge for the government, according to Hofman, is to maintain high growth rates that could impact on the country’ s mar-ginalized sector.

He said, however, that the programs and policies presented in the PDP 2011-2016 have the potential to achieve sustained inclusive growth for the country.

President Aquino formally approved the PDP 2011-2016 after its presentation by the National Economic and Development Authority (NEDA) on March 28.

NEDA Director General and Socioeconomic Planning Secretary Cayetano Paderanga Jr. said that the primary goal of the PDP is to create “inclusive growth, not the trickle-down and jobless growth that we had in the past years.”

He said that among the key targets of the PDP are an annual economic growth of seven to eight percent and the achievement of the Millennium Development Goals (MDGs).

The MDGs are a set of specific and time-bound development goals governments have committed to achieve by 2015.

“To achieve inclusive growth, the country needs to achieve a high and sustained growth path, provide equal access to development opportunities across social spectrums, and implement responsive social safety nets that would assist those who are left behind by the character of growth,” Paderanga said.

He said that the PDP would transform President Aquino’s “Social Contract with the Filipino People” into effective, efficient and inclusive interventions that will guide government agencies.

According to Paderanga, the overarching theme of the PDP 2011-2016 is good governance and anti-corruption in achieving inclusive growth, which would create massive employment opportunities and significantly reduce poverty.

But the PDP 2011-2016 is not without its critics. Former Budget and Management Secretary Benjamin Diokno pointed out one serious flaw in the PDP: it is fuzzy on how it would be financed.

Diokno, who now teaches economics at the University of the Philippines, said that development plans, as a rule, should have a solid, comprehensive chapter on financing and the Plan has none.

Diokno stressed that there is a need to explain the financing gap in the development plan. “How will it be financed? How much will be financed through improved tax collection or through tax reform, which the Aquino government is resisting?” Diokno asked.

Diokno also asked how the public-private partnership projects would be financed and what and how many are these projects.

These were also the same issues raised by the participants to the World Bank-organized forum. They said that to deliver on the targets set by the PDP while reducing corruption and improving equity, there is a need for new tax policies or an in-depth tax administration reform.

To achieve fiscal consolidation and increase priority spending it is essential for the government to raise taxes and strengthen its tax collection. But for reasons of its own, the Aquino administration is coy to this idea at the moment. –ALITO L. MALINAO, AGENCE FRANCE-PRESSE

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