MANILA, Philippines — The government is committed to implementing key reforms that would improve productivity in various sectors, the National Economic and Development Authority (NEDA) said.
In a report released by the World Bank on Monday, it urged the removal of constraints affecting productivity— such as restrictions on foreign investments—to enable the country to attain its long-term agenda of being a poverty-free society by 2040 as reflected in its long-term vision.
In a report titled “Growth and Productivity in the Philippines: Winning the Future,” the international finance organization said the country would be better able to create high-paying jobs and reduce poverty if it can use its resources (human capital, natural resources, machines, technology, knowledge) more efficiently.
To sustain growth in productivity, the report urges the removal of constraints to productivity such as a low competition environment in key business sectors, easing of regulations that are “stifling” small and medium businesses, as well as restrictions on foreign participation in Philippine businesses.
NEDA said the country is committed to pursuing such reforms as embodied in the full implementation of the Ease of Doing Business law, liberalization of foreign investments and promotion of innovation.
“From the very beginning, liberalizing the economy and promoting science, technology and innovation (STI) have always been part of President Duterte’s 10-point socioeconomic agenda. We thank our partner World Bank for affirming that our development agenda is geared towards higher productivity,” said NEDA Undersecretary Rolando Tungpalan.
Tungpalan pointed out the Philippines has already been experiencing gains in productivity with the Philippine economy’s total factor productivity (TFP) growing at three percent, now the highest in Southeast Asia.
Milestones have also been reached including the passage of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law and the Ease of Doing Business Act, which were part of the priority legislative agenda in the Philippine Development Plan 2017-2022, the country’s socioeconomic blueprint, he said.
The WB report said that to attain its long-term vision of becoming a predominantly middle class economy by 2040, the country would need to triple its current income per capita (around $3,500) in the next two decades. This means the economy would have to grow at the annual average of 6.5 percent in the next 22 years versus its average growth rate of 5.3 percent since 2000.
Tungpalan said while more work has to be done to triple the country’s per capita income by 2040 and achieve zero poverty, the Philippines would attain the upper-middle income status by next year with more than $4,000 per capita income.
“We celebrate these gains but we continue to work hard with our sights set on our development goals,” he said.
“The Foreign Investments Negative List (FINL) is now up for the President’s signature, and we are currently reviewing the list of government agencies whose mandates are hindering competition and growth in their sectors,” he added.
Meanwhile, Tungpalan also underscored the need to boost innovation as well as research and development (R&D) particularly in the agricultural sector to help farmers adapt to climate change and increase farm productivity.
“With stronger typhoons expected to dampen our productivity, we need to adapt by investing in STI and R&D, particularly to increase crop resiliency, yield, and overall productivity of farms,” he said.
By estimates of the Department of Agriculture, Typhoon Ompong (Mangkhut) cost the agricultural sector P26.7 billion, affecting 570,521 farmers and fisher folk and 755,361 hectares of land.
The National Disaster Risk Reduction and Management Council reported the cost of damage from climate-related disasters has been increasing from 2011 to 2016. The annual average cost of damage to properties due to natural disasters amounted to around P46.74 billion from 2000-2016, translating to an average annual loss of 0.40 percent in the country’s economic output.