Balisacan cites constraints to rural growth

MANILA, Philippines – Socio-economic Planning Secretary Arsenio M. Balisacan said growth in rural areas is being constrained by inefficient land markets and poor infrastructure.

Speaking at the World Bank (WB)-International Monetary Fund (IMF)’s 2015 Spring Meetings held in Washington last week, Balisacan said there are serious land management and administration problems in the Philippines.

Speaking during the session on Land Governance and Climate-Smart Agriculture, Balisacan, who is also the Director General of the National Economic and Development Authority, said that throughout the years, the Philippines had created so many institutions that administer and manage lands.

“Their functions are overlapping and they have made the operation of rural markets more costly. As a result, the cost of doing business in rural areas is quite high,” he added.

For instance, he said the country’s protracted land reform program has created uncertainty in rural markets, especially in credit markets. The country probably has the world’s longest land reform program — 40 years and still an unfinished business, he added.

He pointed out that many of the beneficiaries of the program are restricted from transferring their lands and even if these lands are with the banks for credit, the banks could not dispose of them.

As a result, many of the farmers are holding land titles that have low collateral values. And as a consequence, credit could not flow to rural areas. In turn, investments have suffered, Balisacan noted.

The NEDA chief emphasized that the demand for credit in rural areas is very much dependent on the profitability of agriculture, which in turn is directly affected by the quality of infrastructure.

If there are no profitable agricultural projects or activities, credit will not flow to agriculture.

“Likewise, increased agricultural production without access to growth, urban centers where the produce can be transported to markets, can actually work against the farmers. Investments have to flow to agriculture and rural areas and that’s what we have been working on lately,” Balisacan added.

In the approved P2.606-trillion 2015 Philippine national budget, P89.1 billion was allocated to support agricultural programs. Thus four percent of the gross domestic product (GDP) has been provided for infrastructure development throughout the country for the year.

“Connectivity is the key to getting the rural communities to participate in the growth process,” he told the forum.

Better land governance and increased infrastructure investments in agriculture and rural areas could spur further economic growth, as these remain critical for productivity, job generation, and poverty reduction in many parts of the Philippines, Balisacan said.

The country registered a 6.2-percent GDP growth last year, despite the poor performance of the agriculture sector and employment remained almost constant despite the expanding population. Private consumption, remittance inflows, and the revenue contributed by the business process outsourcing (BPO) sector remained the key drivers of growth. –Ted Torres (The Philippine Star)