Phl must strengthen products and create new demands — economist

CEBU, Philippines - To prepare for the coming ASEAN common market in 2015, the Philippines should venture into product identification and diversification through the adaptation of country’s capabilities, existing products and connection to relative sectors.

This is according to the senior country economist of  Asian Development Bank, Norio Usui, who said that in the modern services and industry, opportunities for growth and investments are open not only to the Philippines but  also to all emerging countries. 

To get ahead of the game, he said the country should create new demands from both within and outside the region, facilitate technology transfer, and contribute to efficiencies in production.

He warned the Philippines to  be wary of the challenges that these opportunities entail which include the possibility of losing and the establishment of a solid position in the regional production network. 

He said the concentration on product specific constraints such as high electricity prices and the improvement on infrastructure, business and investment climate could enable entrepreneurs to venture into new products. 

Suggesting a notion of distance in the production of alternative goods, he cited that these new products utilize inputs that have been accumulated to serve other “nearby” products, thus creating a strong path dependence.

The Philippines can capitalize on priority products from agribusiness, forest, chemical, electronics, garment, metal-based, mining, motor vehicle, non-metal, wood-based and shipbuilding, he said. 

Usui noted that the growth in making new products is difficult for the country since it lacks the capabilities and doesn’t want to accumulate the capabilities because the products are not being made. 

Given the private sector’s contribution in information, incentives and resources, he said that the government could extend public support for industrial development through priority activities in its investment priority plans, public-private dialogues, and the provision of public inputs such as industrial zones, venture funds, development banks, investment promotion agency, and development councils.

The country has a total of 268 economic zones, 64 manufacturing economic zones and 16 agro-industrial economic zones. 

Usui further pointed out the key challenge for the country is to link the economy growth to poverty reduction among its citizens which seems to be the missing link between its growth and development. 

Although the Gross Domestic Product has accelerated to an average of 4.7 percent since 2000, he said that the job generation remains inadequate and this results to high incidence of poverty. 

This was reflected in fairly rigid rates of unemployment, growing underemployment, and continuous deployment of workers overseas, he said.

The growth on employment opportunities this year, he added, was driven by part-time jobs. 

With the Philippine economic growth largely led by the services sector, Usui suggested economy-wide productivity, industrial upgrading and product diversification as key factors in the promotion of competitiveness and efficiency in taking the road towards inclusive growth. (FREEMAN)