Poverty remains a critical development challenge for the Philippines and structural transformation of the country’s key industries and governance may lead to the path of sustainable inclusive growth, a government-sponsored forum concluded on Wednesday.
“Indeed, a major challenge in promoting inclusivity in the Philippines is how to significantly improve the rate of poverty reduction at par with the progress of our regional neighbors,” Economic Planning Secretary Arsenio Balisacan said in his welcome address at the “Towards Zero Poverty: Pursuing Inclusive Development and Shared Prosperity” forum held in Mandaluyong City.
Balisacan, who is also the National Economic and Development Authority (NEDA), said the rate of poverty reduction has not been as desired in the country despite several decades of research, formulation and implementation of various anti-poverty programs and policies.
The Annual Poverty Indicators Survey (APIS) of the Philippine Statistics Authority (PSA) released in March this year showed the poverty level among Filipinos in the first half of 2014 was up at 25.8 percent from 24.6 percent a year earlier.
The survey’s estimated figures refer to the proportion of people below the poverty line to the total population during the period.
Among Filipino families, poverty incidence increased by 1.1 percentage points to 20 percent during the six-month period from 18.8 percent in the comparative months of 2013.
“Hence, if we are to achieve inclusive and sustainable development, we need evidence-based strategies and interventions that take into consideration the varying development constraints faced by the poor when they try to participate in the growth process,” Balisacan said.
Shift to high-productivity
The NEDA head highlighted the overall need for the country to undergo structural transformation, which he said involves the massive movement of labor from low productivity areas to high-productivity areas.
Reviving industries, particularly the manufacturing sector, is vital in reducing poverty and promoting inclusion, he pointed out.
“We know that manufacturing is a key driver of growth and driver of technological progress in the economy, given its strong linkage to other economic sectors. Thus, one of the government’s key strategies to attain higher productivity growth and greater diversity of economic structure is to revive the Philippine manufacturing sector,” he said.
However, Balisacan stressed that reviving Philippine industries requires addressing key binding constraints to development and pursuing the necessary policy tools and interventions that are focused on improving the country’s long-term competitiveness.
“These include, for example, developing a strategic industrial policy to improve industries’ competitiveness and productivity and continuous increase in investments in human capital development, especially in health, education, and social protection.”
To further increase competitiveness and be at par with our regional neighbors, Balisacan said the country must also pay greater attention to technological readiness and innovation by harnessing appropriate science and technology and investing aptly in research and development (R&D).
“Of course, enhancing the country’s competitiveness depends on the implementation of good policy and practices that improve the business environment and further promote greater human resource development,” he added.
Good governance and credible institutions are seen crucial, with good governance deemed necessary to ensure that policy translates to efficient public spending and effective government programs.
“For this, we need to continuously address horizontal issues and improve coordination among government agencies, as well as between the stakeholders in the private sector and the government,” he said.
Expressing a similar view, Rafaelita Aldaba, assistant secretary at the Department of Trade and Industry, said inclusive growth needs a national strategy for productive transformation.
“Inclusiveness requires high and sustained growth, poverty reduction and social protection programs, pro-active growth policies and industrial strategy to create jobs,” she said.
To achive this, Aldaba noted there is a need to promote growth in the manufacturing sector where labor-intensive and new and high productivity jobs can be created.
Increasing the skills of the poor through greater access to education and improving productivity in agriculture, where half of the poor are, is also required, she said.
MSMEs’ role in inclusive growth
A former economic planning secretary now professor of economics at the Ateneo de Manila University, Cielito Habito, said to reduce poverty in the country, developments must be made in the pillars of inclusive growth namely: micro, small and medium enterprises (MSME), competition policy, asset reform, sectors and industries, and human development.
“There is a need for government-wide concerted effort to expand MSME access to finance. It should be the centerpiece economic project of the government,” he said.
The creation of the Competition Commission under the newly signed Competition Law is expected to address issues such as the abuse of dominance, state entry barriers and regulatory conflict of interest. Mergers and acquisitions, and leveling the playing field were also pointed out as needing improvement.
In asset reform, the economist said proper implementation of the Comprehensive Agrarian Reform Program, Fisheries Code, Indigenous People’s Rights Act, and Urban Development Housing Act will provide equal opportunities for people.
Habito said there is also a need to push industries and sectors like tourism and allied industries, agriculture and agribusiness, and manufacturing where growth generates much employment, benefits other industries in the economy through backward and forward linkages.
Lastly, for human development, he said education for entrepreneurship, as well as universal health care access, must be enhanced.