The Philippines must strengthen overall competitiveness through enhancing competition including reducing the cost of doing business, and addressing infrastructure and service delivery bottlenecks.
This recommendation by the Philippines Quarterly Update (PQU) titled “From Stability to Prosperity for All” recently released by the World Bank (WB).
“The influence of government in investment decisions could be limited as far as prudently possible, in tandem with enhancing competition that builds on the Philippines’ comparatively liberal investment and trade regimes in order to further differentiate itself from competitors,” it said.
The report cited examples of measures that can enhance competition, including cutting the cost of doing business through simplification of approval and regulatory processes.
Barriers to entry, including foreign ownership limits, could be eased in a number of sectors, protection in agriculture lowered and more stringent efforts applied to recover uncollected debt and taxes.
To address infrastructure concerns, it underscored the need for the country to develop a coherent sector investment planning and implementation, accompanied by providing tariff regimes more closely aligned to cost recovery.
“The framework for private participation in infrastructure can be enhanced by further clarifying regulations for the solicitation and evaluation of PPP (public-private partnership) proposals and restricting the capacity to bid on projects to qualified firms,” the report noted.
The PQU pointed out that the Philippines should also strengthen its financial sector and map out policies to ensure affordable access to finance for micro and small companies.
The report also stressed the need to improve workers’ skills to make them more employable and strengthen regulatory capacity in a bid to raise competitiveness.
“Moving to higher value-added production would require improvements in the supply and quality of skills,” it noted.
To improve workers’ skills, the report said industry specific PPPs should be developed to increase quality and capacity and existing institutions, and ensure the successful implementation of the K-12 program.
The K-12 program shifts the Philippine education system from the current 10 years to 12 years plus kindergarten to bring basic education at par with world standards.
Moreover, the PQU said regulatory capacity should be strengthened through ensuring the independence and competence of important regulatory bodies and the justice system.
Enhancing competitiveness to attract more investments is among the three key areas of reforms needed to accelerate growth, create jobs and reduce poverty.
Others reforms cited include strengthening public financial management and raising tax revenues efficiently and equitably.
“Successful implementation of these reforms would allow the country to increase public investment and pro-poor spending and take advantage of new opportunities arising from the global economic rebalancing, given rising production costs in the rest of the region, including China,” the report further said. –PhilExport News and Features
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