STATEMENT OF ARSENIO M. BALISACAN Socioeconomic Planning Secretary Philippines Development Forum 4 February 2013 Davao City

Good morning!

During our last forum in 2011, we presented the Philippines’ overall development framework to achieve inclusive growth.  Anchored on good governance, the Philippine Development Plan for 2011-2016 has been in full swing since then. I am here to report to you the updates and assessment of our performance in achieving our goal.

Despite a weak global economy in 2012, the Philippines registered rapid economic growth of 6.6% for the full year, higher than that of Indonesia (6.3%), Vietnam (5.0%) and Singapore (1.2%). 

This growth was broad-based with almost all sectors significantly contributing to the output, bringing us closer to the 7 to 8-percent growth target set in the Plan.

Even before the 2012 GDP numbers were known, our country had been commended for its sound macroeconomic fundamentals, with low and stable inflation, favorable interest rates, sustainable fiscal and external position, and a strong financial sector.

International institutions have also noticed how our country has continued to improve its competitiveness.  Under this administration, the Philippines climbed 20 notches in just two years, ranking 65th among 144 countries.  We are mindful, though, that our target is to land in the top 30% of the global rankings.

But have we attained inclusive growth?  We recognize that more needs to be done, as shown by the latest data on labor and employment.

We do not yet have official data on poverty for 2012. However, it appears that self-rated poverty and severe hunger are on the decline.

2013 is a crucial year for the Philippines. Given the fiscal space and business confidence, we have the opportunity to accelerate the implementation of development programs to lift the living standard of our people.

We need to sustain the growth momentum and achieve inclusive growth. These two objectives need not contradict each other. In fact, inclusive growth is not just a goal but a growth strategy.

To sustain the growth, we need to ensure that economic growth benefits everyone, regardless of location or social status. We need to promote new sources of growth. 

Currently, 60% of the country’s GDP is concentrated in three regions in Luzon. This shows that we have yet to tap the full potential of other regions, especially those in Mindanao.

Hence, our policy priorities must ensure that our people in the rest of Luzon, Visayas and Mindanao benefit from growth. We need to connect these regions to facilitate access to markets and basic services.

The rest of Luzon has the advantage of proximity to the fastest growing regions.

In the Visayas, our strategy is to strengthen its comparative advantage in tourism, fisheries, ship-building and ICT.

We are very optimistic about Mindanao’s contribution to national development, particularly in agribusiness, tourism and halal industries. The government is mindful of the opportunities and challenges, as we move forward with the Bangsamoro Framework Agreement.

One of the objectives set out in the PDP is to shift the structure of the economy from being largely consumption-driven to one that is increasingly led by investments and exports. The global economic slowdown in the recent years has made this difficult to achieve.  Nevertheless, we will continue to put in place measures to diversify production and trade. 

We need to improve the efficiency of public investment to serve as a catalyst for greater private sector participation in the economy.

For the first two quarters of 2012, it was the public sector that invested heavily on fixed capital, but beginning the third quarter, we are happy to note that the private sector has taken the lead.

Our situation right now is characterized by an excess of savings over investment. The big challenge is to continue improving the investment climate to offer profitable opportunities and channel these savings to productive use that generates jobs.

We need to address the critical constraints to investments, particularly high power cost, poor infrastructure, policy inconsistencies and administrative inefficiencies.

We will improve revenue and tax efforts to increase the resources available for infrastructure and social spending.

Infrastructure development will be guided by a transport infrastructure roadmap toward ensuring efficiency in the flow of goods and services and mobility of people.

We will ensure energy security and reduction in the cost of power.

Going forward, we need to create new drivers of growth, particularly manufacturing, BPO, tourism and agribusiness. Our interest in these sectors is based on their potential for creating high quality jobs. Our initial estimates suggest that US$3B in investments in these sectors will create 621,000 jobs, both directly and indirectly through multiplier effects, all things remaining the same. In addition, the BPO and manufacturing sectors present great opportunities for value adding as well as innovation and technology spill overs.

Tourism, meanwhile, expands job opportunities in the countryside.

To generate more and better employment, we need to simplify labor regulations to enable industries to adapt to the country’s changing economic structure. We will also continue to address problems of skills mismatch.

Agriculture will remain a priority sector to meet the needs of our growing population and to take advantage of market opportunities in fast growing countries in Asia. Although agriculture is expected to decline in relative importance in GDP and employment, increasing productivity in the sector will support industrialization and is key to poverty reduction in rural areas.

We will provide the necessary environment to encourage not only the big companies but also the micro, small and medium enterprises to be our partners in development through marketing assistance, access to credit and reduced red tape.

We are mindful that economic growth is but a means to an end; that development is about improving the quality of life of all Filipinos. We are committed to meet the MDGs, particularly in health and education. The conditional cash transfer program addresses not just current poverty, but also enables children of beneficiary households to escape the binds of inter-generational poverty.  Meanwhile, the K+12 program in education will improve the competitiveness of our graduates in the global economy. Our present crop of schoolchildren will be competent especially in the fields of Math, Science and English.

To help minimize the costs entailed by disasters and climate change on human life, property and businesses, we will focus on building climate change resilient infrastructure, as well as promote preparedness and the use of appropriate technology.

Good governance continues to be the platform to achieve these objectives.  As we encourage greater participation, transparency and accountability in governance, we will also undertake measures to eliminate administrative inefficiencies.

We continue to implement measures to minimize corruption, and to ensure consistency of policies, alignment of plans and priorities, and efficiency of regulation. We want to improve the efficiency and capacity of the bureaucracy to respond to the needs of our people. These will require institutional reforms. This government is determined to see these through.

The reforms and measures that we will undertake and prioritize this year are crucial. The sooner we can address the challenges ahead of us, the sooner we can achieve inclusive growth and development.

Daghang salamat at maayong buntag

M.R. No. 2013-015                                                                                  

04 February 2013