MANILA, Philippines - The Philippine economy could sustain a growth of 6% every year throughout the term of President Aquino if the government can jumpstart its ailing manufacturing sector and create decent jobs.
On the sidelines of the launch of the 2013 Asian Development Outlook on Tuesday, April 9, Asian Development Bank (ADB) Philippines Country Economist Norio Usui told reporters that while it was good that the country received its first investment grade rating from credit rating agency Fitch Ratings in March, this was not enough.
Usui said with an investment grade rating, the country should now strive to attract more investments in the country through the labor intensive sectors such as manufacturing. The employment opportunities these investments will create could increase decent jobs in the country.
The ADB said manufacturing only accounted for 22% of the country's Gross Domestic Product (GDP) in 2012, lower than the 26% share it booked in 1990. As a result, only 8.3% of the country's total employment are employed by the sector.
"A stronger industrial base, particularly in manufacturing, could generate a wide range of jobs. But the development of manufacturing in the Philippines has lagged (behind) most other larger countries in Southeast Asia," the ADB report stated.
ADB stressed that despite high economic growth, at 6.6% in 2012, the country has not made a serious dent on unemployment and, consequently, poverty. Unemployment remains at 7% in 2012 while underemployment is at 20%.
The lack of decent job opportunities in the country, ADB said, also drives Filipinos to go elsewhere to look for jobs -- making overseas employment a necessity. The ADB said there are around 10 million Filipinos now living abroad and 7 million of them are Overseas Filipino Workers (OFWs).
"Further, 40% of those working within the country are classified as vulnerable--unpaid family workers and the self-employed, mostly in the informal sector," the ADB said.
Photo by AFP
The ADB said it is important that the government undertake key reforms to revive the manufacturing sectors. These reforms can include "targeted interventions" that are specific to the needs and demands of the sector.
The report stated that these interventions can be designed to address constraints of particular industries and the corresponding policies to implement them.
The Manila-based lender, however, said the efforts exerted by the government in the past 10 years such as liberalizing trade restrictions, simplifying licensing systems, establishing sound financial systems as well as governance and infrastructure reforms are well commendable.
"While such reforms are crucial, by themselves they may not be enough to attract substantial new manufacturing investments in the near term," ADB said.
"A window may be opening for the Philippines to pursue such a targeted policy, in light of renewed interest by some manufacturers to invest in Southeast Asia at a time that the improvements in the Philippines' investment environment are being recognized," it added.
The ADB forecasted that the Philippines' GDP will post an increase of 6% in 2013 and 5.9% in 2014. The multilateral development bank also said GDP growth of developing Asia will reach 6.6% in 2013 and 6.7% in 2014. - Rappler.com