The Philippine economy needs to be more “outward-looking” to reach new growth levels, opening up several sectors such as infrastructure and tourism to foreign investment, an official of the National Competitiveness Council (NCC) said on Tuesday.
Given a government target for the Filipino family to have a gross monthly income of P120,000 to live a simple and comfortable life, the economy needs first to attract more foreign investment and partnerships to gain more traction, he said.
“Will the economy grow the way we want it to grow just selling to ourselves and keeping the business arena to ourselves?” NCC co-chairman for the private sector Guillermo Luz asked during a media briefing. “I think it would be way clear that we need to be outward-looking. Outward-looking in the form of investments, trading.”
A study by the National Economic and Development Authority (NEDA) puts the level of gross monthly income for a Filipino family to be comfortable at P120,000, which NEDA Deputy Director-General Rosemarie Edillon said would translate to a per capita income of $11,000. At present, income per capita in the Philippines is about $3,500.
Edillon said it took Malaysia 33 years to achieve its current per capita income level of $11,120. At present, Malaysia’s poverty rate is 0.6 percent.
Luz stressed the need for the Philippines to draw in more foreign investment and business partnerships.
“I don’t think that we can maintain the type of growth rate that we want to maintain and lift more people above the poverty line if we just continue to sell just to each other,” Luz said. “I think we need to look outside and see what are the other big trading blocs out there that we can sell to.”
Luz pointed out that the resulting growth of a more open economy would reduce the number of families living below the poverty line.
He suggested that the infrastructure and tourism sectors are areas that should be opened to foreign investment.
The incoming Duterte Administration is reportedly looking to hike infrastructure spending up to 7 percent of the country’s gross domestic product (GDP), higher than the 5 percent target of the Aquino Administration.
Luz emphasized that to be able to boost infrastructure spending in the country, more players should be introduced, as there are not enough developers to meet the growing local infrastructure needs.
“I think the problem is that there won’t be enough operators to get involved in the projects. We need to open up these sectors,” Luz said. “. . . we need to introduce more players to the business arena in order to provide the service. There’s only so much that can be taken up by the current group of players,” Luz said.
Aside from the infrastructure sector, Luz also described the tourism sector as an area that could experience a boom if opened up.
“Tourism is a great area, especially for job generation. If you would take a look at the number of tourism-related jobs versus the BPO jobs, there are actually more tourism jobs.
It’s just that the revenue from BPO jobs is much higher than revenue per tourism job.
Imagine if you were to get revenue per tourism worker closer to the BPO level, this country would actually be booming,” Luz said.
Luz noted that the BPO industry has about 1.2 to 1.3 million workers that generate about $20 billion in annual revenues, or about double what tourism-related workers generate.
“We have tourism, which is generating maybe half of that, close to $10 million. If you can double that, these are areas for big opportunities,” Luz said.