The Philippines must “rebalance” the economy’s composition to generate more and better jobs and reduce the country’s vulnerability to regional or global shocks, the country’s top government economic planner said on Wednesday.
Arsenio Balisacan told a forum organized by the Foreign Correspondents Association of
the Philippines (FOCAP) that rebalancing calls for further investment and the revival of the manufacturing and agribusiness sectors while infrastructure bottlenecks are being addressed.
Balisacan, director general of the National Economic and Development Authority (NEDA), said in his presentation at FOCAP’s Prospects for the Philippines Forum there is a need to improve social services and pass economically vital laws.
“Without this rebalancing, the generation of remunerative, high-quality jobs for the fast-growing labor force and winning the war against poverty will be far harder, if not impossible, to achieve,” Balisacan said.
On the demand side, investments and net exports must take on larger shares of the gross domestic product (GDP) and grow more robustly than ever before, he said.
On the supply side, the NEDA chief stressed the need for a resurgence of industry, especially in manufacturing, and a revival in agribusiness where small farmers become more integrated into the global high-value supply chains.
“On the government’s part, we need to continue removing key infrastructure bottlenecks that have limited the potential of various sectors of the economy, especially in the areas of industry and agriculture,” Balisacan added.
To achieve this, Balisacan said there are good prospects this year for infrastructure development, noting that a total of 93 projects amounting to P1.08 trillion or $24.31 billion have been approved by the NEDA Board under the current administration, seven of which are completed projects, 58 are ongoing or under implementation, and 28 are for implementation.
By source of financing, 23 projects are funded through public-private partnership, 53 projects are financed through official development assistance, and 17 projects are for local financing.
Notably, many public-private partnership (PPP) projects are already in their rollout stage.
The government has already awarded contracts for nine NEDA Board-approved PPP projects, he said.
“We can say that we can expect the other 14 projects to eventually reach this stage, barring any major problems in the process,” he added.
In addition, Balisacan said strong focus on improving services for health, education, and disaster-risk reduction should also be kept as it will enable the government to address the huge backlog in infrastructure and human capital development.
Moreover, he said the government hopes that vital legislation such as the Fiscal Incentives Rationalization, the removal of investment restrictions in specific laws cited in the Foreign Investment Negative List, the amendment of the Build-Operate-Transfer or BOT Law and the Bangsamoro Basic Law will come into fruition in the medium term.
The Cabinet official said these measures are important to sustain growth and to make the growth more inclusive.
“These will definitely unlock all the possibilities for productivity and income growth, especially in lagging areas of our economy,” he added.
However, Balisacan said the government remains on guard to provide the necessary measures to mitigate, if not prevent, the effects of certain risks.
On the external front, he said the government is cautious on the normalization of monetary policy in the United States, the slowdown in large emerging economies, particularly China, weakness in the euro area, recession in Japan, and geopolitical tension in the Middle East.
On the domestic side, disruptions in the peace process; disasters arising from natural hazards, such as typhoons, prolonged monsoon rains, and dry spells; delays in infrastructure and reconstruction projects; and the thin power reserves in the second quarter of 2015 are being watched.
“Our goal up to 2016 is to sustain, if not surpass, our growth performance in the past four years and achieve inclusive growth,” he concluded.