The government should step up efforts to draw in foreign investment and increase exports if the Philippines that are measures for long-term future-proofing economic growth, Socioeconomic Planning Secretary Arsenio Balisacan said.
Balisacan said this during the Economic Journalists Association of the Philippines-San Miguel Corp. (EJAP-SMC) Economic Forum at Ayuntamiento de Manila in Intramuros on Monday.
In his speech, Balisacan said the services sector has been the main driver of the Philippine economy’s recent expansion, accounting for almost two-thirds of the total growth.
“However, exports have grabbed our growth, with our exports performing sluggishly relative to our income,” Balisacan said.
Factories as growth engines
“In the recent economic history of nations, especially in Asia, manufacturing growth was a primary driver of poverty reduction. Not surprisingly, since manufacturing is critical to the productive absorption of unskilled and semi-skilled labor, especially low-productivity labor around agriculture,” Balisacan added.
However, latest data showed that the share of manufacturing in the country’s gross domestic product has recently dropped to 13.5 percent.
On the sidelines of the said forum, Balisacan said the slower growth of manufacturing sector could limit opportunities for poverty reduction, especially for those transitioning from rural and agricultural backgrounds.
“The point I want to make is that if this sector is not expanding as fast as we would want to, there are fewer opportunities for poverty alleviation,” Balisacan said.
He noted that individuals from rural areas who might have sought employment in manufacturing sector are instead finding opportunities in the informal service sector, which often lacks the stability and benefits of more formal employment.
“We already have the consumption of services delivering good things for us. It was able to sustain the economy despite the global slowdown, thanks to domestically driven growth,” Balisacan said.
“We can actually use our strength in the services sector, particularly in ICT and BPM, for the manufacturing sector,” Balisacan added.
Balisacan also suggested integrating IT and business process management with manufacturing, a concept he referred to as “servicification.”