Page last updated at 04:57 UTC, Thursday, 11 May 2023 PH
The Philippine Development Plan (2023 to 2028) does not stay exclusively at the realm of macroeconomics. It also has such a microeconomic focus that it descends to the level of individuals and families. There are statements about developing and protecting the capabilities of individuals and families. Under Chapter 2 of the PDP, there are listed concrete measures to promote human and social development such as improving education and lifelong learning, boosting health and establishing livable communities. Under Chapter 3, the topic covered has to do with reducing vulnerabilities and protecting purchasing power of individuals and households through ensuring food security and proper nutrition as well as strengthening social protection. As the economy transitions from a low-middle income economy to a high-middle income in the next two to three years, Chapter 4 lays down concrete plans to increase employability, expand employment opportunities and achieve shared labor market governance.
At the AIS (Agriculture-Industry-Service) level, the goal is to transform the production sectors in order to generate more quality jobs and competitive products. Chapter 5 is devoted to measures that will modernize agriculture and agribusiness. Chapter 6 has to do with revitalizing industry. It could be mentioned at this juncture that Philippine manufacturing has been expanding noticeably as the economy recovers from the pandemic. The S&P Global Philippines Manufacturing PMI has been showing significant gains mostly on the basis of a strong domestic market. Chapter 7 touches on the largest sector of the economy, suggesting ways of reinvigorating services. Chapter 8 dwells on advancing Research and Development (R&D), technology and innovation. It must be emphasized here that the Philippines need not reinvent the wheel. For example, in improving the productivity of the entire agribusiness sector, much can be gained by partnering with investors from countries who have been most successful in this vital sector, such as Israel, Taiwan and Thailand. Much can be learned from Malaysia in large-scale corporate farming based on the nucleus estate model which is very applicable to the coconut industry of the Philippines. We can swallow our pride and ask Vietnam how it became the second largest coffee in the world after Brazil in less than a generation.
Chapter 10 addresses the key question of the role of the Government in promoting competition and improving regulatory efficiency, especially as regards the Philippine Competition Commission. It is followed by Chapter 11 on how to ensure macroeconomic stability and expand inclusive and innovative finance. It in this field in which the private sector can have the greatest confidence in our economic managers who have been chosen from among the best and the brightest, following a tradition over the last thirty years during which very competent people in the various national economic agencies met the challenge of building stronger macroeconomic institutions and espoused more enlightened policies which are now the foundation of our resilience during periods of global crises. These macroeconomic institutions and policies, led and implemented by the present competent officials, will actually guarantee a minimum of economic growth of 6 to 7% in GDP for the duration of the present Administration.
Chapter 12 has to do with expanding and upgrading infrastructure. Let me point out here that infrastructure building should go beyond farm to market roads, bridges, toll roads, dams and similar elementary facilities. They should increasingly encompass world class international airports, seaports, telecommunication facilities, data centers, railways including bullet trains especially in the island of Mindanao, subways, and similar infrastructures characteristic of a First World Country (e.g. Japan, Taiwan and South Korea). There is no way we can advance to these levels of infrastructure building without the entry of billions of dollars of foreign direct investments. Every effort must be exerted, including the proposed Maharlika Investment Fund, to attract these FDIs to supplement our very scarce supply of domestic long-term capital. I estimate that with close collaboration between the Government and the private business sector, we can attract some $15 to $20 billion annually in the next five years. These are the amounts that Vietnam has been attracting over at least the last ten years.
Chapters 13 and 14 have to do with what we can call soft infrastructure, i.e. ensuring peace and security and enhancement of administrative justice as well as the practice of good governance and the improvement of bureaucratic efficiency. Together with the improvement of agricultural productivity and a substantial increase in the flow of FDIs, these enabling conditions to be contributed by the public sector can lead to an acceleration of the annual GDP growth from 6 -7 % to an average of 8–10%, the range that can guarantee our bringing down poverty incidence to single digit of 9% by 2028. Finally, Chapter 15 refers to an imperative for sustainability, i.e. accelerating climate action and strengthening disaster resilience.
In the promotion of trade and investments in goods and services, the PDP outlines very concrete strategic guidelines to restore, sustain and strengthen the Philippine export sectors, both in goods and services:
-Resolve key constraints to export growth and competitiveness.
-Proactively monitor and implement preventive measures and interventions for distressed firms.
-Implement targeted, more granular strategies to increase exports on three fronts: global value chain (GVC) export clusters (industrial, manufacturing, and transportation (IMT); technology, media and telecommunications (TMT); and health and life sciences (HLS); food and agri-marine; and ; labor-intensive manufacturing. Comments: There is need to re-examine the serious restriction of foreign direct investment in media as contained in the Philippine Constitution of 1987. It would have been a game changer if the amendment of the Public Service Act (PSA) included allowing foreign investors to own 100 % of media enterprises. In this era of Industrial Revolution 4.0, there is a convergence of the telecom, IT and media sectors. The inability of foreign investor to invest in media seriously constrains the growth of TMT which has the greatest potential for growth among services and in which Filipino talents have a competitive advantage in the Indo-Pacific region, together with India.
-Significantly diversify exports by fortifying the sectoral backward and forward linkages. Comments: Consolidating small farm units to achieve economies of scale in agriculture and diversifying into higher value products can help the Philippines replicate its success story in being a major exporter of bananas and pineapples by significantly increasing the production and export of mangoes, cacao, coffee, avocado, durian, a host of high-value coconut products such as coco sugar, water, milk, etc. and a variety of other high-value vegetables and fruits being exported in large volumes by neighboring ASEAN countries like Thailand and Vietnam.
-Advance purposive, assertive and forward-looking Regional Trade Agreements strategies. It is imperative that the Philippine Government ratify our membership in the Regional Comprehensive Economic Partnership (RCEP) to boost our trade and investment relationships with fourteen other economies in the Asia Pacific region. We would literally be like an economic leper in this region if we remain outside the RCEP.
-Position the Philippines as the foremost supplier of tradeable intermediate services. Our young, growing and English-speaking population will give us a competitive advantage for a long time to come in what we have called the servification of the global economy in which services are increasingly overshadowing manufacturing.
-Ensure integrated, whole-of-government commitment to deliver broad access to National Quality Infrastructure. To be continued.