Economic experts are calling on the next administration to tackle pressing reforms to propel the economy, including reforms in the areas of investment and employment.
Former Socioeconomic Planning secretary Romulo Neri and Foundation for Economic Freedom President Calixto Chikiamco both said that aside from addressing the usual problems of the country to keep the economy afloat—power shortage, slow internet speed, transport and infrastructure constraints—the incoming administration should immediately pass reforms that can help boost investments in the country.
During the general membership meeting of the Philippine Chamber of Commerce and Industry (PCCI) last week, Chikiamco mentioned four areas where there should be effective reforms: investments, employment, agriculture, and exchange rates.
For investments, Chikiamco said the government should act on the 60-40 foreign ownership rule, which mandates a 40 percent limitation in ownership for foreign companies in favor of the local companies they partner with in order to enter the Philippine market.
“We need constitutional changes to reform the 60-40 restriction. The next president should remove the limitation to attract investments,” he said.
For the employment segment, the FEF president said that “we need to modernize the labor code” in order to reduce the unemployment and underemployment rates.
He suggested that there should be rationalization of minimum wages and removal of the “6-month labor security.”
In terms of the agricultural sector, Chikiamco said the government should allow the leasing of lands to increase in scale and productivity as the land market in the Philippines is “very restrictive” at present.
“The government should remove the monopoly of anything in rice…Remove graft and corruption. We have to free the land market because it is very restrictive,” he said.
Chikiamco pointed out that current prices of local rice are three times that of imported rice from Vietnam.
Chikiamco said the agriculture sector might have the potential for growth and boost the economy in the long term, but only if the next administration takes steps to revive the sector.
The FEF president also suggested that the Philippines “needs a competitive exchange rate,” which would be favorable for exports, as well as for overseas Filipino workers (OFW).
“We need a competitive exchange rate. This is to encourage exports, and reward OFWs with higher spending power that will support industries,” he added.
For his part, Neri said that some of the economic challenges for the next administration include persistent poverty, high unemployment and underemployment rates (5.6 percent and 17.7 percent respectively as of end-October 2015), inadequate infrastructure, a neglected agriculture sector, and vulnerability to natural disasters.
The former socioeconomic planning chief said that the government would need not only reforms, but also must “spend more” on infrastructure projects.
Over the past five years, the country’s economy has grown by an average of 6.2 percent annually. This year, the government is aiming for 6.5 percent to 7.5 percent gross domestic product (GDP) growth.
The consensus among economists is that the economy will grow by 6 percent to 7 percent this year, regardless of who becomes the next president.