Going for 7% to 7.5% growth

Under certain conditions that the International Monetary Fund (IMF) recently specified, our growth potential could reach 7 percent to 7.5 percent a year that would place the country among Asia’s tiger economies.

The Philippines has the capacity to boost its growth under ambitious policies and the right sequencing.

The first thing would be to address bottlenecks that are constraining economic activity, including investments in critical infrastructure (electrical grids, enhancing power supply through renewable energy investments, transport, digital infrastructure, etc.), reforming business regulation and opening the telecommunications sector to greater competition.

The Philippine Digital Infrastructure Project, which aims to boost connectivity in remote areas and improve cybersecurity, should support some of these objectives.

With regard to maritime trade, a more efficient management of Philippine ports is needed, as are lower shipping and customs clearance fees, and reduced freight charges.

Then there’s the perennially laggard farm output.

Improvements in the agriculture sector have significant upside potential and should include increased investment; improved access to credit and insurance; lower tariffs and non-tariff barriers (e.g. through the 2019 Rice Tariffication Law); policies to address the high vulnerability to multidimensional shocks; expanding long term public-private partnership (PPP) programs to attract investment and value chain upgrading; and promoting land consolidation.

Governance should improve, particularly at the local government level, including strengthening oversight of government-owned and -controlled corporations and of PPPs which could be supported by legislating the Progressive Budgeting for Better and Modernized Governance and the National Government Rightsizing Program.

The ongoing digitalization of the Public Financial Management (PFM) system, procurement processes, frontline services and the courts would also help.

Efforts to reduce corruption and improve contract and property rights enforcement should be prioritized.

Education reforms must be initiated to boost learning outcomes and increase educational attainment among lower income households, and to ensure workers have the right skills for the labor market. This should include a review of the basic education system to strengthen foundational skills; technical and vocational training aligned with the needs of the job market through PPPs; more equitable access to tertiary education; and lifelong learning opportunities for professional development.

Labor market reforms should include efforts to promote women’s participation in the economy and could focus on increasing childcare options; addressing social norms that confine women to domestic roles; taking advantage of work from home opportunities in the business process outsourcing sector and e-commerce; and expanding access to technical and vocational education in ICT (information and communications technology) and science, technology, engineering and mathematics-related fields.