‘Growth not denting poverty’

MANILA, Philippines - High unemployment and poverty incidence will remain a big challenge for the government in the next 10 years or so even amid steady growth – largely because of decades of squandered opportunities, the government’s chief economist said yesterday.

But National Economic and Development Authority (NEDA) director general Arsenio Balisacan in a press briefing said the administration is on track in its effort to provide the foundation for improving the lives of Filipinos.

He said the government hopes to steer the economy toward an annual growth of seven to eight percent until 2016, reduce unemployment to 6.5 to 6.7 percent as well as incidence of income poverty to 18 to 20 percent by the end of President Aquino’s term.

“Overall, the ultimate goal of the updated plan is inclusive growth,” he said.

He said sustaining growth in the next five years, 10 years or “even better 20 years” would entail a “major reduction” in poverty.

“But as I said – and as the experiences of other nations show – we can make poverty reduction even quicker, even faster if we complement that with direct programs for the poor,” Balisacan said.

“Although our unemployment rate has been kept within the targeted range of 6.8 to 7.2 percent, a bigger challenge is reducing the underemployment rate, which is still close to 20 percent,” he said. “An even bigger challenge is bringing down the poverty rate to 16.6 percent by 2016 from its level in 2012 of 25.2 percent.”

Balisacan also said social services were being improved and now more targeted.

He said provinces have been placed under categories based on skills sets. Furthermore, the government is engaged in more aggressive employment facilitation for better job-skills match, especially concerning the poor.

“These strategies will require what we call narrow targeting, meaning that the beneficiary should be known by name,” he said. “For this reason, we will make use of the data from the National Household Targeting System which identifies the poor households in these provinces by name.”

At the same time, Balisacan said growth and employment opportunities in these provinces must be enhanced.

“We will begin with the growth sectors present in these provinces, then focus on providing auxiliary and ancillary services that could be provided by the poorest families in the province,” he said.

“Based on our growth experience, these sectors could be IT (information technology)-business process management, tourism, construction, manufacturing and logistics,” he said.

Instead of underspending, the government has also allocated more resources for its conditional cash transfer program, education, health, among other services, to benefit the poor.

“The thing about investment and social services is that we actually inherited a big… huge gaps in the spending, not only classrooms that you have read, but also in many other social services,” he said.

In the last three years, Balisacan said the public had seen tremendous support for social development, particularly for projects with children as main beneficiaries.

‘Lost decade’

Balisacan said the Philippines had committed in 1991 to reduce poverty by half by 2015 but with the target missed, a lot of catching up has to be done.

“What has happened was that by 1997 and even as early as 1994 – from 1994, in fact, to almost 2009, you hardly see any change in the poverty incidence. So I keep saying that we lost a decade, and I keep describing that decade as a ‘lost decade’ insofar as poverty reduction is concerned,” he said.

Balisacan said there had been a modest reduction of poverty incidence since 2009 – declining from 27 to 25 percent.

“But we can, as I have indicated earlier, after reviewing our performance for the last three years, we do believe that we can make the connection between economic growth and poverty reduction sharper. That is, we are going to look at specific geography, specific provinces and cities where the poor are, and we look at the circumstances of those areas and sectors, and we will tailor-fit the interventions that will matter most to the poor,” he said.

While various assessments of the country have cited critical constraints to investors like poor quality of infrastructure, high cost of doing business and poor peace and order situation, Balisacan said these are now being addressed.

“We know what they are: the regulatory bottlenecks, the bureaucratic processes. And over the last three years, we have made some progress, as we have seen in the indicators of the ease of doing business indicators and the competitiveness indicators – these are global reports,” he said.

“And then... often mentioned is the peace and order problem. Obviously, I keep saying that Mindanao for us has so much potential, not only for agriculture, but for tourism, for industry,” he said.

“We do believe that, together with good governance, good institutions, we can get those investments coming in,” he said.

He also said domestic investors should shell out more to entice foreign investors. He said local investors should take the lead in tapping opportunities the economy offers.

“If you cannot get your private local investors to invest, how would you expect foreign investors to come in? So I think that if we can fix those problems that I have identified among other things, I think we can get investments rising quickly, and I have seen the results of some of those initial efforts,” Balisacan said.

“We have seen now investments finally coming in. Last year, one of the major drivers of growth that we have seen is capital formation, investment. And we just need to get that to continue over the next several years to join the ranks of our neighbors,” he added.

Cha-cha not important

Balisacan also stressed that Charter change, as the President has maintained, would not necessarily become the deal breaker for the country since investors’ problems were not the Constitution but the constraints.

“We need not be distracted. For me, I would rather push for these things that I believe, and based on the experiences of other countries and our country of the past three decades… I’ve seen the data, I’ve seen the evidence, I’ve seen all the work,” he said. “And I think that, if I have to make a bet… I would focus on those well-identified problems.”

He also said the national budget and the Public-Private Partnership projects would be significant drivers of growth.

“Obviously, what we are putting in place is not a band-aid solution to our problem. You know, if you want much lower unemployment than what we are getting, that actually is easy to do,” he said.

“If you behave irresponsibly like hiring Juans and Pedros for one day or two days or one week; and then do your surveys and you reduce your unemployment. That is not the kind of development we want to achieve,” Balisacan said.

“We want the Pedros and the Juans to graduate out of poverty and so the quality jobs is crucial here; and creating these quality jobs take time because we need to get the private sector to believe in us, so that they could invest in places where quality jobs can be created, like what we have said: manufacturing, agribusiness, logistics and infrastructure, tourism. These are the very promising areas for high quality jobs,” he stressed.

Balisacan also pointed out that other countries took decades to achieve economic development and that popular measures like providing subsidies must be avoided as these had proven to be costly for countries in the long run.