The Philippines should not rely solely on economic zones to attract investments, but improve its business environment outside of these areas as well, the World Bank said.
In the latest issue of the Philippine Quarterly Update, its magazine on the country’s latest economic and social trends, the WB said improving the Philippines’ overall business environment will encourage innovation and promote investments in human capital, which in turn will enable the country to harness advanced technologies associated with foreign direct investments.
According to the WB, despite being an open economy the Philippines is behind its neighbors when it comes to openness to trade. Its exports have been growing slower than its gross national product. And in terms of exports survival, the Philippines had the lowest score compared to its neighboring countries within the ASEAN region.
One thing that both local and international experts have noticed is a decline in semiconductors’ export earnings this year, which the WB attributes primarily to the decline in global demand, changing technology which the Philippines has yet to adopt, and stagnant physical capital per worker.
The Philippines’ failure to adjust to cutting-edge technology, said the WB, is why the country missed some opportunities in the manufacture of a new generation of gadgets like tablets and smart phones.
But, said the WB, the country’s export diversification—mainly an increasing number of non-electronic food processing and health-related products being exported, according to Socioeconomic Planning Secretary Arsenio Balisacan—has also resulted in improved market destinations, now exporting significantly to China and other emerging economies as well as its traditional trading partner, the US.
The WB also recommended a more efficient regulatory system to improve productivity and competitiveness to boost services exports. — BM, GMA News
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