Major reforms required for 9% GDP growth–JFC

By Cai Ordinario, Businessmirror, Sep 14, 2017

BUSINESSMEN belonging to the Joint Foreign Chambers (JFC) on Thursday identified reforms that must be undertaken by the Duterte administration to grow GDP by 9 percent and achieve the goals of its 10-point socioeconomic agenda.

The JFC’s recommendations are contained in its publication, titled “Arangkada Philippines and the 10-Point Socioeconomic Agenda of the Duterte Administration”, which was presented during a forum held in Pasay City.

“Despite the impressive progress, in comparison to its other major Asean neighbors, the Philippines still lags behind in terms of overall competitiveness,” the report read.

Citing the most recent data from the World Economic Forum (WEF) Global Competitiveness Report, the Arangkada publication noted that the Philippines rated considerably lower than Malaysia, Thailand and Indonesia, and only slightly ahead of Vietnam.

“The unfortunate 10-place drop from 47 in 2015 to 57 in the 2016 WEF competitiveness ranking underlines the need to both sustain improvements and increase efforts to move ahead of the competition, which is not standing still in their own efforts to attract more investment,” the report added.

The JFC said it outlined numerous recommendations for boosting the economy, increasing competition and improving the investment climate, infrastructure building, rural development, investing in human-capital development and strengthening the implementation of the reproductive-health law.

The group also called for promoting science and technology, developing creative industries, promoting manufacturing and strengthening the poverty alleviation and social-protection program.

“The government should adopt policies to double the GDP growth rate to 9 percent. This has to be supported by a clear long-term industry policy,” the Arangkada report read. This clear long-term industry policy, the JFC said, will allow the Philippines to also increase its earnings from merchandise exports by 15 percent annually and hit the $100-billion mark.

European Chamber of Commerce of the Philippines President Guenter Taus said for the longest time factories were only doing assembly work.

When it comes to manufacturing, Taus added the countries that have strong industries are South Korea, Japan, the United States and EU. The manufacturing sector has created 5 million to 7 million jobs in these countries. In order to “create” a manufacturing sector, Taus said the government needs to support small and medium enterprises to enable them to manufacture and deliver goods.

“If you look at $25 billion or $30 billion in export in the electronics sector and look at the related import figures, you will be shocked. Everything we actually do here, what we keep here is labor because all the rest is import, and what we export is a semifinished good, not the finished product,” Taus added.

American Chamber of Commerce senior adviser John D. Forbes said this is linked to the recommendations from the last Sulong Pilipinas summit, which urged the government to focus on the country’s competitive advantages.

Forbes added, however, the industry road maps have not identified specific commodities or products that the Philippines can concentrate on. While a 9-percent GDP growth and a double-digit export growth has not been recorded in nearly 10 years, Socioeconomic Planning Secretary Ernesto M. Pernia said these are “doable targets” for the Philippines.

The highest GDP growth registered by the Philippines in nearly 40 years is 7.6 percent, while the highest export growth in 10 years was posted in 2010 at 33.98 percent.

“A higher growth is always an ambition, and we all want to grow the economy faster, exports, investments, so [there’s] nothing wrong with that. This is why they are using the word arangkada, because it’s really quantum jumps, quantum leaps,” Pernia said at the sidelines of forum.

“[These targets are] feasible, especially when we remove the restrictions on foreign investment and the negative list,” he added.

Philippine Association of Multinational Companies Regional Headquarters Inc. Director Safdar Quraeshi said agriculture is a “clear competitive advantage” for the country.

However, Quraeshi added many agribusinesses do not have access to shared machineries, solar technology and other innovations.

He said the government must extend incentives to these agri firms while encouraging the growth and development of companies belonging to the business-process outsourcing sector.

In the January-to-June period, the economy grew by 6.4 percent, slower than the 7 percent posted in the same period last year.

GDP expanded by 6.5 percent in the second quarter on the back of strong manufacturing growth, trade, and real estate, renting and business activities.