NEDA: Regulatory barriers hinder services trade reform

CEBU, Philippines - While the services sector is a major productivity growth contributor in the Philippines and Asia-Pacific Economic Cooperation region in general, Socioeconomic Planning Secretary Arsenio Balisacan said the sector mainly faces regulatory barriers.

"The services sector faces unique and significant barriers that, in many cases, are regulatory in nature. If a regulation is too restrictive and prescriptive, then it will hinder innovation," Balisacan said in speech during the Regional Conference of Services Coalition in Cebu City Monday.

Balisacan, secretary of the National Economic and Development Authority, said the region needs to enhance competition of markets to have an effective services trade reform.

Balisacan added ensuring effective regulation to deal with market failures to promote efficiency and having social objectives to promote equity are also necessary for services trade reform.

Innovation is deemed important for the development of the services sector. "Technological progress, especially in transport and information and communications technology, has transformed business practices, where innovations have reduced the cost, increased the speed, improved the quality and expanded the products that are traded domestically and across borders," the state economic planner said.

The Neda official said these innovations are especially beneficial to small and medium enterprises.

He said the services industry is an important growth driver in the Philippines and other APEC economies.

In the Philippines, the sector accounts for 54% of total employment and it also makes up two-thirds of APEC's combined gross domestic product (GDP) and 71% of global GDP.

"This is important at a time when APEC economies are facing an environment of slower global economic growth, slower potential growth and relatively weak business investment," said Balisacan.

The sector includes, among others, telecommunications, e-commerce, transportation, finance and banking, engineering, construction, legal, healthcare and education services. — (FREEMAN)