The Philippines remains a bright spot in Asia despite the recent slowdown in its economy, with growth targets set by the government for this year and 2016 looking attainable and may even gain further momentum up to 10 percent over the next 10 years, economist Bernardo Villegas said on Tuesday.
The government is targeting 7 percent to 8 percent growth in gross domestic product (GDP) in 2015 and 2016.
Villegas, founder of the University of Asia and the Pacific (UA&P), said in the first Asia CEO gathering for this year that the Philippines’ 2015-2016 growth target of 7 percent to 8 percent annually “is attainable,” given the multiple emerging sectors and several improvement segments that the country is set to develop.
The usual growth areas will sustain and boost the country’s GDP, he said, referring to business process outsourcing (BPO) and overseas Filipino workers’ remittances. He also highlighted emerging sectors such as manufacturing, tourism, consumer-oriented industries, infrastructure and agribusiness, among others.
“Toward 2016, 8 percent to 10 percent GDP growth is very doable. That is going to continue in the next 10 years due to the strong BPO and remittances sector, especially if the country boosts its infrastructure spending,” Villegas said.
“I think the economy is still poised to grow 6.3 percent in 2014 and 7.3 percent in 2015 due to the sectors enumerated,” he added.
Foreign ownership law
The UA&P economist also noted that the next government should be able to work with Congress in amending the 60-40 foreign ownership law under the Constitution.
He said the government should ease the foreign ownership rule on businesses to encourage investors and boost foreign direct investment (FDI) in the country, which should help the economy sustain brisk growth.
Villegas said two sectors will have multiplier effects on the economy — the BPO sector, which drives growth in the real estate and commercial development, and OFW remittances, which raise the purchasing power of middle-income consumers.
Remittances have been growing 5 percent to 6 percent, while the BPO sector is seen generating $25 billion in revenues sent into the country by 1.3 million Filipinos in 2016, up from $16 billion recorded in 2013.
The economy could have grown as much as 8 percent in 2014-2015 if it were not for underspending by the government, Villegas said.
“The 8-percent growth (rate) could have happened if the present government is competent in spending the budget for infrastructure projects. The administration could have unleashed fully 50 PPP [public-private partnership] projects,” he said.
“This is the failure of the present government — so much delay, cancellations in PPP projects. Now, that is the challenge for the next administration,” he added.
Among the significant PPP projects that faced delays were the Cavite Laguna Expressway (Calax), the construction of which was slowed by the appeal filed by San Miguel Group with the Presidential Palace despite Team Orion having submitted the top bid; and the awarding of the LRT, MRT Common Station as the courts granted SM Group’s petition for a TRO from building the common station at the side of Ayala Group’s TriNoma mall.
The common station was set to connect LRT1, MRT3 and eventually MRT7 to increase foot traffic to establishments linked to it, making it favorable to both Ayala and SM groups to boost passenger/customer flow into each other’s retail outlets — the TriNoma and SM North EDSA malls.
The completion of the NLEX-SLEX Connector Road project has also been deferred to 2017 onward from the initially set end-2016 target, with the project now subjected to a Swiss challenge from the planned joint venture method to supposedly expedite its construction.
Since the Aquino Administration stepped in and aggressively pursued its PPP program four years ago, projects that have been awarded include the P2.01 billion Daanghari-SLEX Link Road, the P16.42 billion PPP for School Infrastructure Project (PSIP) Phase 1, the P8.8 billion PPP for School Infrastructure Project (PSIP) Phase 2, and the P15.52 billion Ninoy Aquino International Airport Expressway.
Completing the list were infrastructure projects that include the P5.69 billion Modernization of Philippine Orthopedic Center, the P1.72 billion Automatic Fare Collection System, P17.52 billion Mactan-Cebu International AIrport Passenger Terminal Building, and thhe P64.6 billion Light Rail Transit (LRT) Line 1 Cavite Extension Project.
Villegas said that aside from the boost provided by the BPO industry, remittances, infrastructure and other emerging sectors to the economy, growth of 8 percent to 10 percent could also be attained if corporates would turn their focus on to the improvement of the agribusiness segment and help the farmers, thereby reducing the rate of poverty among the poorest Filipinos.