THE Philippines should focus on three key areas of concerns to achieve ‘economic freedom,’ according to the US-based Heritage Foundation.
In a briefing on Wednesday, the think tank’s Senior Analyst Anthony Kim and Executive Director Ambassador Terry Miller both said that the Philippines should further improve its policies and reforms for the elimination of corruption, ease restrictions on foreign investments, and remove the influence of corruption in the judicial system.
“The country should improve its rule of law in the performance of the judicial system and in fighting corruption. If those are addressed, there should be advancement in the [economic freedom]score for the long term. Address corruption and change the culture to correct the acceptance of corruption in the [government]processes,” Miller said.
“For the short term, the Philippines should focus on investment freedom, which entails a series of policies in investment and trade. Protectionist policies that protect the local business and keep foreign business establishments from coming in should be eased to attract more foreign direct investments (FDI) compared to neighboring countries,” he added.
Kim said the economic momentum is already present, noting that the Philippines is one of the fastest growing economies in the world, achieving 6.1 percent gross domestic product (GDP) growth for the full-year 2014, and having 7 percent to 8 percent GDP growth targets for 2015 and 2016.
But to be more “economically free”—with higher economic growth, higher per capita incomes, greater efficiencies, and easier access to loans, among other things—Kim said the government should focus on reforms and the improvement of policies that will benefit individuals and achieve inclusive growth.
“The momentum [in the economy]is here. I think it’s the time to do more. The country should avoid being complacent in its policies. You should push greater reforms for prosperity. It is an ongoing process—how you drive that progress is a critical process. The momentum is here, and it’s time to do more, not less,” Kim said.
“It is a question of political will to continue the reforms and policies to further develop the momentum towards economic freedom,” Miller said.
In the release of the 2015 Index of Economic Freedom last month, the Heritage Foundation reported that the Philippines jumped 13 notches to 76th place in the index from its 89th rank last year.
The country scored 62.2 points in the report, 2.1 points higher than a year ago on slight improvements in the financial system of the country.
The level of economic freedom is believed to influence an economy’s ability to attract investments, generate employment, and boost incomes.
Heritage Foundation defines “economic freedom” as the right of any individual to control his labor and property, as well as to work, produce, consume and invest without unnecessary constraints.
In an economically free society, labor, capital and goods move freely, the think tank said.
Both Miller and Kim stressed that the Philippines should sustain its fast economic growth, the notable performance of its financial system, and address the three key areas of concern to push the country higher in the index.
Although there are segments where the country lags, Miller and Kim recognized the effective performance of the country’s financial system. They said the Bangko Sentral ng Pilipinas’ (BSP) policies on inflation, debts and government spending, are notable for surpassing world standards.
“The fiscal administration of the country is notable. Debt, government spending, and inflation are very much under control. The performance here is at the highest level compared to other countries,” Miller said.
“Our prospects are pretty good. It is only a question of political will—what kind of
economic system you would have to fully take advantage of the current growth,” Miller said.
“People should put pressure on politicians to improve more. There should be a debate at the societal level, and you should reach a consensus in policies besides the continuation of the current policies moving the economy. There is no reason why the Philippines should be held back,” he added.
“The Philippines is in the process in transforming itself. Based on what we have seen in the data, we remain positive. There is a potential in going upward. I think we can see greater momentum going forward,” Kim said.
The top five countries that registered the highest scores in economic freedom were Hong Kong (89.6 points), Singapore (89.4), New Zealand (82.1), Australia (81.4), and Switzerland (80.5).
On the other hand, the bottom five countries with the lowest scores were North Korea (1.3 points), Cuba (29.6), Venezuela (34.3), Zimbabwe (37.6), and Eritrea (38.9).
KRISTYN NIKA M. LAZO