BSP urges dev’t of other industry sectors

MANILA, Philippines – The service-driven Philippine economy has benefitted the country with jobs and huge remittances but development of other sectors is vital to achieve sustainable and inclusive growth, central bank officials said.

Services have become the “largest source of employment” for the Philippines with respect to a growing business process outsourcing (IT-BPO) sector and the biggest provider of our foreign exchange needs in terms of remittances, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said last Friday.

“These highlight the growing importance of the services sector,” he said.

The $11-billion IT-BPO sector, in particular, has been a “critical sector for employment,” he said, with data showing the sector having 640,000 direct employees in 2011.

“While the IT-BPO has been a critical sector for employment, our capacity to benefit from this huge and expanding sector (hinges on) the quality of existing and potential workforce, infrastructure development, and a good policy environment,” Guinigundo explained.

Resolution of the debt crisis abroad could also help, he said, as he warned that “protectionist policies” from slowing developed countries wanting to provide jobs to their locals could result into “potential domestic job loss.”

“The government should have appropriate risk management measures to help cushion the impact (of these policies) to this sector,” Guinigundo said.

On the brighter side, remittances from overseas Filipino workers (OFW) have proven to be resilient even during the financial crisis in 2008, said Sittie Hannisha Butocan of BSP’s department of economic research.

A total of 9.453 million Filipinos are abroad as of 2010, most of whom are in the medical, healthcare, IT and food and hotel sectors, data showed. They have been sending an average of $20 billion a year ($10.1 billion as of June) which goes to the country’s reserves that as of July already ballooned to $79.3 billion, a new record-high.

“Remittances have been a significant source of foreign exchange” used by the country for settling debts in foreign denominations and imports or as buffer for external shocks, Butocan said.

For consumers, Guinigundo said remittances provide more spending power to OFW families helping “spur private consumption and investment” and thus growth.

Butocan said the sustained hiring of overseas Filipinos, existence of more high-paying jobs and BSP’s efforts to expand access to financial services have contributed to the continued growth in remittances.

While the services sector has proven to be a good growth driver, Guinigundo said it should not serve as a “cure-all” to the problems of the Philippine economy.

The manufacturing and industrial sectors should also be given attention, he said.

The services sector grew 8.5 percent in the first quarter, faster than the over-all economic expansion rate of 6.4 percent, government data showed. Second quarter growth data is expected to be released on Thursday. –Prinz P. Magtulis (The Philippine Star)