‘PH to stand impact of US policies’

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But US economic policy expert urges govt to invest in human capital

The Philippine economy has strength to stand the negative impact of the tougher trade policy of new US President-elect Donald Trump, but must invest further in human capital and continue to improve its investment climate to attract more investors, a Columbia University economic policy expert said.

Arvid Lukauskas, executive director at the Picker Center for Executive Education and the Program in Economic Policy Management at the School of International and Public Affairs at the Columbia University, said Trump’s trade policy could provoke strong opposition from China, which could also stir tensions among the US’ other trade partners.

The Philippines, he said, should be able to deal with any fallout from that by using its strengths.


“In his campaign he talked about putting a 45-percent tariff on China. Obviously, according to WTO [World
Trade Organization] rules, that cannot be done easily. We could see this sort of aggressive approach towards what he calls unfair trade deals,” Lukauskas told reporters in a press chat hosted by the Investor Relations Office held at the Bangko Sentral ng Pilipinas (BSP) complex on Thursday.

“This will likely set a bit of a trade war because countries like China would not take this sitting down. This scenario is already a bit scary because this could impact international trade and could increase tensions across a wide range of different countries,” he warned.

In the case of the Philippines, Lukauskas said there are a couple of strengths that can serve as a buffer for its economy.

“The Philippines has experienced a period of relatively fast and sustained growth for a number of years. That is why it is seen as a good place to invest in right now. That will definitely help in this process,” he said.

Besides strong growth, the Philippines has good ties with the US, the Columbia University professor said.

“On a political level, I think that helps. The recent comments by your President maybe putting a little bit of tension on that relationship, so that’s a little bit of a concern. But ultimately, I think that relationship is strong enough to weather those comments,” he pointed out.

Improved governance

Lukauskas also mentioned that the Philippines is making progress in terms of governance.

“A lot of investors are focused on that. It’s not just the opportunities in terms of accessing markets, but are there investments going to be governed or regulated in a fair way? And I think there has been some progress here in that regard. Certainly, there could be more progress,” he said.

Nevertheless, the professor said the country still has a lot of work to do to be attractive when it comes to foreign direct investments (FDIs).

Ease of doing business

“Can you do more to make the Philippines a more attractive place? Yes I think. Definitely in the area of ‘ease of doing business,’” he said.

Lukauskas said the Philippines does not rate very well in many of the standard indices in the World Bank’s Ease of Doing Business Report, with the country ranking 99th in the world.

“That is not terribly good and I think working on that would be a very positive thing because it would make the Philippines more attractive,” he said.

“I think if you have a better investment climate in terms of rules and regulation on how long it takes to open a business, I think that would be very positive,” he added.

Human capital

The professor also urged the country to invest further in human capital, which he said is a critical development to attract FDIs.

“Investors are looking for investment destinations where there are high skills, variety of different skills, and flexible labor markets. I think that is a great deal for the Philippines,” he concluded.

Filipino workers have long held an edge over their Asian neighbors in terms of their English-speaking skills, education level and cheap labor, but over recent years have faced stiffer competition from other contenders for foreign investment and employment.

According to the World Economic Forum’s 2015 Human Capital Report, out of 124 countries worldwide, the Philippines ranks 46th, with a score of 71.24 in terms of optimizing its human capital endowment–the skills and capacities that reside in people and that are put to productive use.

The Philippines ranks in the mid-range of the overall Index scores and failed to enter the 80 percent threshold in terms of ability to nurture talent through education, skills development and deployment at all stages of the human life cycle.

The report said the Philippines has best helped reach the maximum potential of its talent pool aged 15 to 24. It ranked 20th in human capital development for the 15 to 24 age group.

Partly due to low primary education enrollment rates, however, the Philippines ranked relatively low at 76th in developing the talent of those aged below 15 years old.

The country ranked 51st, 40th, and 33rd in helping reach the potential of its talent base aged 25 to 54, 55 to 64, as well as 65 and above, respectively.

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