Philippine govt pressed on economic reforms

Manila (Philippine Daily Inquirer/ANN) - After consolidating power during the recent mid-term elections, now is the time for Philippine President Benigno Aquino III to "sink his teeth" into substantial reforms to raise the productivity and efficiency of the economy, according to a research report by British banking giant HSBC.

HSBC said the outcome of the recent elections-in which the administration is poised to take control of both the House and the Senate-raised expectations that the President would use his stronger mandate to push forward stronger steps to tackle the country's structural challenges: Low investment and jobs growth.

"Raising public investment, loosening of FDI (foreign direct investments) restrictions on foreign ownership and improving the business environment are all required reforms to address the economy's structural weakness," said the May 16 report titled "Stronger Mandate" and written by HSBC economist Trinh Nguyen.

Since coming to office in May 2010, the current administration has made gradual progress to lift the profile of the Philippines as the administration has raised the efficiency of public spending and closed tax loopholes to raise revenue collection, instilling confidence in the governance of the country.

Such important steps built the foundation for deeper reforms and the upgrade of the sovereign to investment-grade status by two rating agencies. But Nguyen said these reforms were not enough to: raise revenue, reduce regulatory bottlenecks and attract foreign direct investments (FDIs) to strengthen the manufacturing sector, raise productivity and diversify the economy.

Nguyen said economic indicators in the first quarter were reflective of the structural issues weighing on the economy: A gradual loss of manufacturing sector competitiveness, an over-reliance on services and weak revenue generation. She added that the erosion of manufacturing competitiveness, particularly in the electronics sector, had contributed to the recent export contraction. As a result, she noted that the economy had become more dependent on remittance flows.

"The State of the Nation Address in July will reveal President Aquino's reform agenda for the remainder of his term. A relaxation of foreign ownership for some sectors is possible and measures to raise revenue collection-such as mining reform-are also expected. But deeper reforms are needed for the Philippines' fortunes truly to turn," Nguyen said.

"Hope is pinned on Aquino using his mandate to deliver potent policy actions that can help the Philippines capitalise on its favourable demographics and fulfill its economic potential," she said.

While the Philippines impressed the international community with a strong 6.6-per cent year-on-year gross domestic product (GDP) growth in 2012, the report said much of the growth was because of a favourable base effect, accommodating fiscal and monetary policy and strong remittances.

While rising remittance inflows support private spending, they have also put pressure on the peso to appreciate. Such local currency appreciation, the report said, has added to the headwinds "that have, over time, sapped the competitiveness of the export sector, including deteriorating infrastructure, an inefficient labour market and worsening business environment."

The report also noted that the gradual decline of the manufacturing sector (most vividly represented by the fall in exports as a share of GDP) has raised the Philippines' dependence on the service sector and caused a loss of job opportunities, especially for low-skilled workers.

COPYRIGHT: ASIA NEWS NETWORK

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • ‘Racist remark vs Pinays not reflective of HK sentiment’
    ‘Racist remark vs Pinays not reflective of HK sentiment’

    The Philippine consulate general in Hong Kong believes that the “racist” statement of legislator Regina Ip against Filipina domestic helpers in Hong Kong is not reflective of the general sentiments of the Hong Kong community. Hong Kong is home to more than 173,00 Filipinos working mostly as household service workers. “They have left their loved ones back home to earn a decent living taking care of Hong Kong families. This, in turn, has engendered positive impact on both the quality of life …

  • SWS: Gov’t rating sinks to record low
    SWS: Gov’t rating sinks to record low

    “The Aquino administration is firmly determined to carry on and complete priority programs in all five pillars of the Philippine development plan, to ensure that reforms will be sustained by strengthened public institutions, to tread the righteous path and ensure that good governance becomes the norm at all levels of government, and to sustain and make permanent the gains from the transformation of mindsets and institutions,” Coloma added. Lawmakers expressed belief yesterday that the Aquino …

  • ‘Pacmania’ sweeping the nation
    ‘Pacmania’ sweeping the nation

    Manny Pacquiao’s face is on shirts, dolls and postage stamps, his life story is playing in movie houses, and millions are getting ready to party as the Philippine boxing hero’s “fight of the century” nears. Pacmania is sweeping the nation of 100 million people ahead of the May 2 Las Vegas bout against unbeaten Floyd Mayweather Jr. to decide who is the best boxer of their generation. …

  • House committee to put Bangsamoro police under PNP
    House committee to put Bangsamoro police under PNP

    The House ad hoc committee on the proposed Bangsamoro Basic Law (BBL) will put police forces in the envisioned new autonomous Muslim region under the Philippine National Police (PNP), and not under the regional chief minister. “We will delete the provision in the draft BBL giving the chief minister operational, administrative and disciplinary control over police forces in the region,” Cagayan de Oro City Rep. Rufus Rodriguez, committee chairman, said in a television interview. He said under …

  • Phl to seek more US military aid
    Phl to seek more US military aid

    The Philippines said yesterday it would soon ask the United States for more military equipment and training to build its defenses, as it faces Chinese “aggressiveness” in disputed waters. As hundreds of Filipino and American Marines simulated an amphibious assault to reclaim territory from invaders during annual war games, Armed Forces chief Gen. Gregorio Pio Catapang said he was drafting a “wish list” for US aid. Catapang said the Philippines would ask for “equipment and training” when …

  • Senate bill seeks planting of trees in parks, schools
    Senate bill seeks planting of trees in parks, schools

    A bill in the Senate is seeking to require the planting of trees in parks, school grounds, vacant lots and other urban areas nationwide. Sen. Juan Edgardo Angara said Bill No. 2566, the Greening Act of 2015, supports and complements the government’s National Greening Program to plant 1.5 billion trees in 1.5 million hectares of land from 2011 to 2016. “The Philippines was once known for its vast and lush forests,”he said. The Philippines was also named one of the world’s 10 most threatened …

  • ‘No need to convene NSC over sea tension’
    ‘No need to convene NSC over sea tension’

    There is no need to convene the National Security Council at the moment, despite China’s continued provocative activities in the West Philippine Sea. “At this time, the President does not see any need really to convene the NSC,” deputy presidential spokesperson Abigail Valte yesterday told a news briefing, carried live by state-run PTV-4 and radio station dzRB. …

  • Fisherman narrates Chinese harassment at sea
    Fisherman narrates Chinese harassment at sea

    Fishing is the only livelihood available for Efren Montehermoso Jr. But after a huge Chinese ship drove away his small fishing boat near the disputed Panatag (Scarborough) Shoal in the West Philippine Sea, he promised never to return to the area for fear of his life. Montehermoso of Barangay Cato in Infanta town was among the group of 80 Filipino fishermen driven away by Chinese coast guard on April 9. Montehermoso said they went to the disputed area not to fish but just to seek temporary …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options