The Philippines is well positioned to seize opportunities and benefit from the upcoming full integration of the ASEAN Economic Community (AEC) next year, as it is buoyed by an impressive economic performance sustained by the various economic reforms.
“The country is in a sweet spot. We have been experiencing robust economic growth, consistent upward rankings in competitiveness, and successive credit rating upgrades. In fact, last year, the Philippines achieved an average growth rate of 6.3 percent, the highest five-year average during the past 40 years. That’s a very decent number which is probably one of the highest growth rates in this part of the world,” said Department of Trade & Industry (DTI) Secretary Gregory Domingo. He made this statement during the Wharton and Penn Alumni Association meeting held on 07 September 2015 in Bonifacio Global City, Taguig.
“The future looks bright for the Philippines. Based on projections by HSBC and Goldman-Sachs, the Philippines will be ranked as the 14th largest economy in the world, the 5th largest economy in Asia and the largest economy in the Southeast Asian Region by 2050. We are even poised to surpass other ASEAN countries. We only need to step up our efforts to improve the competitiveness and capability of our various local industries, as we participate in regional and global trade,” Domingo said. He added that initiatives to liberalize the country now and then significantly contributes to the steady growth of industries.
In particular, the country’s manufacturing sector has been reported to be growing at an average rate of 8.8 percent yearly as a result of the diversification of local products and liberalization.
“While we may have suffered the initial pains of such a move, it still turned out to be beneficial because these restructuring measures improved the competitiveness of our local industries. Testament to this is our shift from manufacturing garments for low end brands to high end brands such as Ralph Lauren, Cole Hahn, Coach, and Anne Taylor,” said Domingo.
Domingo, who is also the current Asia-Pacific Economic Cooperation (APEC) Chair, emphasized the need to place micro, small and medium enterprises (MSMEs) at the front and center of regional trade agenda.
“Among our key priorities is advancing specific and concrete interventions to promote the participation of MSMEs in regional and global markets, either through global value chains (GVCs) or as direct exporters of finished goods and services. We are quite successful in doing so during the APEC Ministers Responsible for Trade (MRT) meeting. Member economies agreed to bolster the ability of MSMEs to participate in cross-border business through the ‘Boracay Action Agenda to Globalize MSMEs,” he said.
In the Philippines, MSMEs account for about a third of the gross domestic product, represent 98% of all registered businesses, and employ more than 50% of the entire domestic workforce.
Going forward, Secretary Domingo said that good governance should prevail. “If there is a single factor that places us in the economic map, it is good governance. Over the last five years, strides for good governance increased our investment grade level by two notches as reported by credit rating agencies namely Fitch, Moody’s Standard & Poor’s. This, in turn, increased investments in favor of the country,” he explained.
Domingo also added that the Philippines should also invest heavily on Filipinos – which is one of its advantages. “Filipinos are educated, skilled, and with a median age of 23 years old and below. If we are able to continuously harness their skills to be productive, we can assure ourselves decades of high growth for the Philippines. Young people, in particular, can help boost our economy as they grow older,” he said.
The government, in its effort to ensure that Filipinos will be at par with other nations, doubled its expenditure for education and has been implementing the K to 12 program. The program aligns the country’s educational system to the global standard which requires a 12-year primary and secondary education.
The DTI Secretary also said the government continues to invest on infrastructure. “Believe it or not, even though we have this terrible traffic, we do invest in the right infrastructure. We have tripled our infrastructure budget from around P165 billion in 2010 to P535 billion this year That explains why we now see many trains, bridges, much better roads, and skyways. Traffic will not get better much soon. But, by the end of next year, we will already feel the benefits of an improved infrastructure system,” he said.
Domingo also cited significant economic reforms that amended the Banking Act, and enacted the Competition Law and a cabotage-related law. He also advocated reforms in the tax system to lower income taxes and simplify tax compliance, particularly for the MSMEs.
“All of these endeavors are in line with our efforts to accelerate trade and investment in the region, all the while creating an enabling environment for businesses to prosper, and ensuring that every Filipino participates and seizes opportunities in the global market,” concluded Domingo. (END)